On September 4, Karnataka Bharatiya Janata Party MLA Arvind Bellad claimed that the Taliban crisis in Afghanistan was responsible for the decline in crude oil supply.
“Because of the Taliban crisis in Afghanistan, there has been a dip in supply of crude oil. Consequently, prices of LPG, petrol and diesel are rising. Voters are mature enough to understand the reasons for price rise,” Bellad was quoted as saying by NDTV.
This claim is misleading for two reasons: Firstly, Afghanistan is not one of the countries that export oil to India. And, secondly, the crisis in Afghanistan has not yet proven to affect global crude oil supply, economists told FactChecker.
India is the third-largest importer of crude oil in the world after the United States and China, according to The Observatory of Economic Complexity. The country imports about 82% of crude oil for its petroleum products from the Organisation of the Petroleum Exporting Countries such as Iraq, Saudi Arabia, Nigeria, United Arab Emirates, Kuwait and Venezuela.
The value of Indian crude oil imports fell by 36.7% from all supplying countries since 2019 when crude oil purchases were valued at $101.9 billion. Of the 15 countries that export crude oil to India, there are three countries that showed a growth in supply, namely, Brazil (up by 19.3%), Qatar (11.1%) and Oman (2.8%). Whereas, countries such as Venezuela (-59.3%), Angola (-50.1%), Malaysia (-47.7%), Nigeria (-44.4%) and Mexico (-41.4%) showed a decline in the value of crude oil supply to India.
Madan Sabnavis, the chief economist at CARE Ratings, said the Taliban crisis and the hike in fuel prices cannot be linked. “Afghanistan is not of consequence in the demand or supply of oil and presently the crisis is localised to [their] own country,” said Sabnavis. “Therefore, oil prices can’t be linked.”
FactChecker also spoke to Mumbai-based economist Ajit Ranade. He said since India does not import oil from Afghanistan, the link is indirect and tenuous. “In a very generic sense, any geopolitical upheaval in the world has a bearing in the oil market,” Ranade told FactChecker. “These hotspots tend to be in the middle-east, but the linkage is very complex and there is a heightened risk perception. How it will play out is difficult to say.”
“There is an OPEC cartel that decides how much crude oil to produce and not to produce,” he explained. “So, the cartel may decide to cut the production to keep prices high using the geopolitical tensions as an alibi. But one can’t make a definitive statement. Since we don’t import oil from Afghanistan there is no direct link.”
When FactChecker contacted Bellad for clarification on his statement, he said the media interpreted his comment incorrectly. “What I meant was that international events always have an impact on oil prices,” said the MLA for Hubli-Dharwad West constituency.
Fuel prices had crossed Rs 100 per litre in several states and Union Territories in India in June. The price of petrol in Delhi increased 61 times from January 1 till July 9, as a Lok Sabha response given by Hardeep Singh Puri, Minister of Petroleum and Natural Gas on July 19. The cost of diesel too increased 61 times and the cost of domestic LPG increased five times during the same period.
Petrol prices had hit an all-time high at Rs 107.8 in Mumbai and 110.2 in Bhopal on July 17. As of September 7, the price of petrol is Rs 107.27 per litre in Mumbai, while diesel is at Rs 96.2 a litre. In Bhopal, petrol costs Rs 109.64 per litre and diesel is priced at Rs 97.44 a litre.
In the past, Madhya Pradesh BJP leader Ramratan Payal made a similar claim when questioned about rising fuel prices. “Go to Taliban,” Payal told journalists on August 19. “Petrol is Rs 50 per litre in Afghanistan, but there is no one to use it. At least there is safety in India. The third wave of Covid-19 is about to hit us. The first two waves have already passed. The country is going through a tough time, and you are talking about petrol prices.”
Similarly, in June, former Union Petroleum Minister Dharmendra Pradhan had said that fuel prices cannot be brought down because the government is saving money to spend on welfare schemes. During a press conference on August 24, the current petroleum minister Hardeep Singh Puri also defended the central government on the rising fuel prices by saying that the revenue collected from excise duty is spent on various welfare schemes.
Prior to this, Union Finance Minister Nirmala Sitharaman, national in-charge of BJP’s Information and Technology department Amit Malviya and Puri had passed the blame to the United Progressive Alliance government for issuing oil bonds worth Rs 1.34 lakh crore to reduce the prices of petrol.
But, FactChecker had found that the Centre had not paid any outstanding oil bonds since March 2015.
This article first appeared on FactChecker.in, a publication of the data-driven and public-interest journalism non-profit IndiaSpend.
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