High oil prices are a massive headache for India as economy feels the squeeze

  • While petroleum-producing countries are being buoyed by higher global oil prices, the big consumers are taking a hit — especially India and other Asian nations.
  • India is the world's third-largest oil consumer, and sources about 86 percent of its crude oil and 75 percent of its natural gas from OPEC countries.
  • The 14 nations of OPEC are convened in Vienna, Austria, this week where they will attempt to reach an agreement on oil production levels for the next 18 months.

While petroleum-producing countries are being buoyed by higher global oil prices, the big consumers are taking a hit — especially India, whose energy appetite is growing, its oil minister said at the Vienna OPEC summit Wednesday.

"We are a primary consumer country, our import is very huge… our appetite is growing, and in future we are (a) major consumer," Dharmendra Pradhan, India's petroleum and natural gas minister, told CNBC's Steve Sedgwick.

India is the world's third-largest oil consumer. The country of 1.3 billion, and its sizable middle class, is rapidly growing and thus seeing its energy needs increase — so the increased oil prices of the last several months have become a serious burden for its economy.

"We are a very, very price sensitive country. This kind of high price is pinching our economy. We appreciate market forces should operate, but the price should be responsible and reasonable," Pradhan said. "This is the scenario. We should get preferential treatment. We should get good terms."

The minister lamented OPEC's "Asian premium" — the extra charge that the cartel charges Asian buyers like China and India when selling them oil. India and China's oil ministers have in previous months agreed to work together to voice their opposition to the policy and pen a strategy for achieving lower prices.

India sources about 86 percent of its crude oil and 75 percent of its natural gas from OPEC countries.

But gone are the days when there was one sole source of energy, the minister said, arguing that more "reasonable" oil prices are beneficial for both consumers and producers. "Renewable energy is coming in a big way. Technology, innovation, all those things are pushing," he said, arguing that long-term high oil prices will push consumers toward alternative options.

The 14 nations of OPEC are convened in Vienna, Austria, this week where they will attempt to reach an agreement on oil production levels for the next 18 months, but consensus is not particularly likely.

Leading producers like Saudi Arabia and non-OPEC member Russia are pushing for output hikes, while countries with little ability to pump more — including Iran, Iraq and Venezuela — staunchly oppose any change in the current policy.

— CNBC's Patti Dom contributed to this report.