New Delhi: The worldwide demand for oil has drastically reduced since the Coronavirus went on a rampage around the world. This has pulled the oil rates down. Countries like India, who import 80% of its oil requirement, can benefit in a big way because of this. Media are claiming that the dispute between OPEK countries and Russia over oil production cut, may be advantageous for India.
The crude oil rates have come down to USD 38 per barrel. In this scenario, OPEK is demanding to control the rates by reducing oil production. The demand from OPEK, which is under the Saudi Arabian influence, was rejected by Russia. Russia delivered a jolt to OPEK, saying that it will not cut its oil production. This has busted the OPEK effort to control the oil prices, in order to avoid losses, by cutting down production.
The dispute between OPEK and Russia can be beneficial for countries like India, who are major importers of crude oil. Saudi is the biggest oil supplier for India. But now, the United States and Russia also are keen on supplying oil to India, and both these countries have increased their fuel supplies to India. Last year, India signed new oil-related cooperation with Russia and the results would be visible in the near future.
In this situation, India seems to have been presented with new options regarding fuel. The Indian oil companies have started making big profits because of the reduction in crude oil rates. Saudi Arabian oil company, Aramco, is offering a major discount to India and other Asian customer countries.
Russia, who is keen on increasing its share in the Indian oil market, also may take such decisions in the future.
Meanwhile, indications are that the differences between Russia and the OPEK countries are of political nature. In the past, Russia had appealed to OPEK and Saudi Arabia, the leader of OPEK, to cut down oil production. But Saudi had not responded to the appeal. Therefore, Russia seems to be avenging that refusal by dismissing the current Saudi demand. There is no possibility, in sight, of a truce between Russia and OPEK over the oil rates even in the future. Therefore, a country like India can get a major advantage.
The Indian economy may get a major boost because of this. But the economists are also pointing out that the Indian economy is also taking a hit because of the fall in the oil rates. Indian goods are exported to the countries where India imports oil from. Because of the crisis created by fall in the oil rates the Indian exports and in turn, the Indian industrial sector is affected. As per the analysts, this matter could dampen the growth of the Indian economy. The economists claimed that although on the face of it, the reduction in the oil rates, beyond a certain level, seem to be beneficial for India, the indirect effects also will have to be faced by India.