From high inflation to import bill - the domino effect of rising crude oil prices on Indian economy
settle at $90.04 a barrel on Tuesday, closing above the $90 mark for the first time since November 16, 2022. US WTI futures had gained $1.14, or 1.3 per cent, to settle at $86.69 a barrel, also a 10-month high. Investors had expected Saudi Arabia and Russia to extend voluntary cuts into October, but the three-month extension was unexpected.
Today, OPEC nations produce around 30 per cent of the world's crude oil. Saudi Arabia is the largest oil producer within the cartel, producing more than 10 million barrels a day. OPEC+ pumps around 40 per cent of the world's crude and its policy decisions can have a major impact on oil prices.
High global oil prices could impact emerging economies such as India - a country largely dependent on imports to fulfill its energy needs. Also Read: Higher CPI, volatile stocks and yields: RBI explains how OPEC decisions impact Indian economy
The economic impact of global oil supply have important implications for India – a net importer of crude oil – to deliver price stability. Moreover, the oil supply-related news shocks cause a sustained increase in consumer prices and reduce the domestic output - for a short duration.
India - a net importer of crude oil which fulfills as much as 85 per cent of its energy needs through imports, may see a heavier import bill if international crude oil prices keep rising throughout the year. India produced a total of 2.50 million metric tonnes (MMT) of crude oil in July 2023 - registering a growth of 2.1 per cent compared to the year-ago period, according to Petroleum Planning & Analysis Cell (PPAC). Crude oil imports decreased by 6.3 per cent and 2.4 per cent during June 2023 and April-July 2023 respectively, compared to the corresponding period of the
