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India concerned over crude price hike

India on Wednesday expressed serious concern on the increasing international crude oil prices saying any price beyond $25 a barrel was unaffordable to developing countries like India.

Reacting to the Organisation of Petroleum Exporting Countries' decision to leave production levels unchanged amid suspension of exports by Iraq, Minister of State for Petroleum, Santosh Gangwar, said, "We are monitoring the situation closely. Developments on the (international crude oil front) are of concern to us as we import nearly 70 per cent of the domestic requirement."

India can sustain crude oil prices upto the levels of $25 a barrel but with prices touching $29 a barrel on Wednesday, it would definitely have an implication on the economy, he said.

"If the prices continue to increase, it will be a serious problem for us as a rise of $1 per barrel results in an increase of about Rs 2.50 billion to the oil pool account," Gangwar said.

India's oil pool deficit stood at Rs 125 billion at the end of 2000-01 fiscal.

Asked if the Iraqi decision to stop crude oil sales would have any bearing on the oil-for-food programme, Gangwar said, "We import limited amount of crude from Iraq under the United Nations food-for-oil programme. It will not have a major bearing."

The minister hoped that better sense would prevail and prices would be brought down so as not to put developing economies to hardship.

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