Results of Falling Crude Oil Prices


wealthymatters1. Reduction of India’s crude oil import bill.

2.Soft crude oil prices threaten growth in oil producing economies and has an effect on foreign fund flows into India.

3.Falling crude prices means lower income for oil-exporting countries, leading to slowdown in global demandĀ and fall inĀ Indian exports.

 

Oil Economics


wealthymattersSo how will falling crude oil prices benefit India? The slide in crude oil prices to four-year lows is a huge positive for India as the country depends on imports for more than three fourths of its consumption. It is expected to help improve pivotal macroeconomic indicators such as current account and fiscal deficit besides giving a fillip to energy firms, tyre makers and consumer companies.

India’s net imports of crude oil amount to about a billion barrels every year. So, if crude oil prices average about $100 per barrel in the current fiscal (vs about $106 per barrel in the first six months of the financial year), the country’s import bill will fall by $10 billion (about Rs61,000 crore), which is close to one-third of the current account deficit or CAD in 2013-14. Analysts say that if crude oil averages at $100 per barrel this fiscal, India’s CAD will reduce to 1.3% of GDP from 1.7% in the previous year. Read more of this post

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