· The war has been launched by Saudi Arabia.
· The steep fall in the crude oil prices have been registered on the single day from $ 33 to $ 12 per barrel on 09.03.2020.
· The shock to oil also rattled stock markets, which were already in a panic because of the novel coronavirus outbreak.
· Energy stocks were clobbered.Exploration and production companies suffered even steeper losses.
· The turmoil comes after the implosion of an alliance between OPEC and Russia, which had been restraining oil supply since the start of 2017 in an attempt to support prices.
· Oil just had its worst day in last 11 years as OPEC and Russia fall out over the coronavirus crisis.
· Russia refused to go along with OPEC's proposal to rescue the coronavirus-battered oil market by further cutting production at a meeting in Vienna, Austria on 07.03.2020.
· The standoff left the oil industry shell-shocked and sparked a 10% plunge in oil prices Friday itself.
· The Saudi Arabia slashed its official selling prices by $6 to $8 in a bid to retake market share and heap pressure on Russia.
· Russia's refusal to cut production amounted to a slap to US shale oil producers, many of which need higher oil prices to survive.
Impact of the fall in prices on India
· India is the world’s third-largest oil importer and the fourth-largest buyer of liquefied natural gas (LNG).
· Every dollar drop in the price of oil decreases the import bill by Rs10,700 crore on an annualized basis.
· India spent $111.9 billion on oil imports in 2018-19 and is a key Asian refining hub, with an installed capacity of more than 249.4 million tonnes per annum (mtpa) through 23 refineries.
· Lower crude prices bring good tidings to the government’s exchequer amid a revenue shortfall and a burgeoning fiscal deficit.
· A fall in global prices will positively impact India’s oil import bill and its trade deficit.
· A lower import bill could further help bridge the current account deficit.
· It would also have a positive impact on inflation.
· India’s economic growth is estimated by the National Statistical Office to hit an 11-year low of 5% in 2019-20 on the back of sluggish consumption and investment demand.
· The fall in the oil prices have the possibility to support , manufacturing , curtain inflation, attract investment and increase the consumption.
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