Saudi allays fears of supply shocks as crude prices hit $80 a barrel

While Pradhan expressed concern about rising prices and its negative impact on consumers and the Indian economy, the Saudi minister was trying to ease India’s concerns over the oil price spike.

The government, however, is trying to put on a brave face, saying the jump in crude oil prices is temporary in nature and that prices will subside soon.

The government has to guard against an oil led inflationary spike as it would hurt the investment cycle.

Saudi Arabia said it would make sure the world is adequately supplied with oil to support global economic growth as oil zoomed past $80 a barrel for the first time since 2014.

Khalid al Falih, Saudi Arabi’s influential oil minister called India's petroleum minister Dharmendra Pradhan to assure him that supporting global economic growth was "one of the kingdom's key goals", the Saudi ministry said in a statement.

"He (Falih) reiterated his commitment towards market stability and that the Kingdom together with other producers will ensure availability of adequate supplies to offset any potential shortfalls," the statement said.

Oil prices rose back to $80 per barrel for the first time since 2014 amidst rising concerns over disruptions to Iranian oil exports because of new US sanctions and plummeting output in Venezuela.

While Saudi Arabia will gain from rising oil prices, the Indian economy will be hit hard by the escalating prices and the impact it has on consumers in the world's third largest oil consumer.

"I expressed my concern about rising prices of crude oil and its negative impact on consumers and the Indian economy and reiterated the need for stable and moderate crude oil prices," Pradhan said in a statement.

The Saudi minister is reported to have briefed Pradhan on his consultations with major producing countries both in and outside of OPEC, including Russia.

India is one of the world's fastest growing economies and the third-largest oil consumer after the United States and China.

While a combined reduction in oil production by Opec and Russia since January 2017 has helped reduce excess global stocks and revive prices, it is unlikely to further reduce supplies as consuming nations have voiced concerns the price rally might have gone too far and could lead to demand destruction.

OPEC member the United Arab Emirates said on Thursday Opec had bigger issues to consider than the impact of the US decision to withdraw from the international nuclear deal with Iran such as Venezuela's collapsing output.

US President Donald Trump has also called on Opec to help cool oil prices saying they were artificially high and that it was "unacceptable".

While the Indian government is putting on a brave front, it has ruled out any to reduction in duties and levies because of the comfortable fiscal situation and the temporary nature of the oil price hike.