Will US-IRAN crisis affect crude oil in india?
- Following Iran's missile attack on the US-led forces in Iraq few days ago and also the mounting political tensions within the Middle East, the rising crude costs could cause a negative impact on the Indian economy in the long-term, however not in the short to medium term period, say consultants.
The international fossil oil costs breached
the $70 per barrel mark few days back,, though cooled off later within the day.
Brent crude futures rose ninety seven cents to $69.24, once earlier rising to
$71.75, the highest since September 2019. However, oil retail costs in India
remained unchanged after rising consistently throughout the week. The petrol
value is at Rs 75.74 per liter in Delhi these days and Rs 81.33 per litre in
Mumbai.
Experts believe india might not face crude
oil shortage if the tensions within the Mideast increase
even to a war, as several countries like Saudi Arabia, Venezuela or other
Mediterranean and middle east countries will assure supplies to the country.
However, increase in costs might have an effect on India's fiscal deficit and
consumer index within the long run, they say.
The current spike in crude price could be a
temporary case and could be a reaction to the developments within the Mideast.
As far as availability is concerned, it's not a difficulty for India, however
continued higher costs can have an impact and can be dangerous for the health
of the economy," says Deepak Mahurkar, leader, oil and gas, PwC India. He
notes that an expert committee shaped many years ago, that looked into the
impact of oil costs rising by ten per cent, had assessed while inflation may be
contained and restricted to about ten per cent, the foremost affected sectors
may be agriculture and manufacturing within the future. Overall consumption may
go down, however that will not have an effect on the basics of the economy.
Oil value hikes are usually considered one
of the most reasons for inflation and a fall in economic process. just in case
of fiscal deficit, a $10 per barrel increase in crude costs ends up in a
maximum additional payment of $12.5 billion, assumptive no changes in taxes and
no-pass through of upper costs to consumers, according to a reserve bank of
India (RBI) assessment last year. the present account deficit was at $6.25
billion during the September quarter compared to a deficit of $19.03 billion
within the same quarter of the previous fiscal year. The analysts say it's
tough to quantify losses or the impact on current account deficit or fiscal
deficit at now this point.
Analysts feel the stress may ease as long
as production facilities in iran and the middle east or the United States stay
unaffected by attacks.