India and Iran Unite in Desire for Lower Crude Prices

The Saudis have sent contradictory signals about where they want crude prices to be. File Image / Pixabay

A growing sentiment fostered by media is that current crude prices are lower than many members of the Organization of the Petroleum Exporting Countries (OPEC) anticipated when they agreed to enact their production cuts; however, while Saudi Arabia is still holding out for $80 oil, India's oil minister says he would be happier with $50 per barrel.

Dharmendra Pradhan told Bloomberg television that "India is a very price sensitive market" and that current prices are too high for the third largest crude consumer: "From Indian consumers' point of view, I would be more than happy if prices were around $50-plus."

He added that if the Saudi's achieve their goal of $80 crude "it will pinch India in a big way."

Pradham stated repeatedly that the machinations of OPEC must be beneficial for all nations, and he seems to have an ally in Bijan Zangeneh, oil minister for Iran, who on Wednesday told media "I believe in this situation around $60 is a good price; I think we should look at the market not for short-term, long-term, mid-term is important for us.

"It is very important for producers and consumers not to have volatility in the market."

When asked if Brent trading at $70-plus per barrel is too high, Zangeneh answered, "Yes"; he also expressed hope that India and Iran can finalize the main issue on the development of the Farzad B natural gas field in the next two months.

However, whether it is a matter of his comments being misinterpreted or the oil minister doing an instant about-face, media also reported Zanganeh stating that "I think this level of prices is acceptable and I believe all are comfortable with this level of prices."

Also remarkable was a comment made on Wednesday by Khalid al Falih, oil minister for Saudi Arabia: despite the Saudis dominating the headlines this week with their intention to see crude rise to $80 per barrel to improve the valuation of state-owned Saudi Aramco prior to its initial public offering, al Falih said, in response to whether he was pleased with the current state of the oil market,"Yes, I am."

Unless the quote was taken out of context, it would be difficult to put stock in anything the Saudi oil minister has to say moving forward, in view of the $80 goal and considering last month he complained that current crude prices have failed to trigger the industry investments his kingdom needs, and that "we're still $1 trillion in investment levels below where we were before the downturn in oil prices."