look news india
The increasing military conflict between America and Iran and the announcement of the end of the ceasefire has shaken the economy of the entire world. Due to this war that broke out between the two countries, there has been a sudden huge jump in the prices of crude oil in the international market. Market experts have warned that if this tension continues for a long time, the Indian crude basket will cross the figure of $ 75 per barrel, which may start a new round of inflation in India.
Global market frightened by strict restrictions and attacks
In fact, the supply chain of crude oil has been badly affected since America re-imposed strict economic sanctions on Iran and bombed more than 80 of its military bases. Along with this, missile attacks on oil and LNG tankers near the Strait of Hormuz have created an atmosphere of fear in the global market. Due to this nervousness, the global standard Brent crude has jumped by almost 6 percent to reach $ 78 per barrel, while American crude (WTI) has also crossed $ 74.
Does India have a ‘Plan B’ ready to deal with the crisis?
The matter of relief for India in this period of tension is that the country’s oil strategy is now stronger than ever. According to Debopam Chaudhary, Chief Economist of Piramal Group, India has stopped depending only on the Middle East (Gulf countries) for oil imports. India is now buying diversified oil on a large scale from countries like Russia, America and Venezuela. Axis Direct’s commodity analyst Devaiya Gaglani believes that even if the Hormuz route is closed, India will not face a direct supply crisis, because Saudi Arabia has announced the biggest discount scheme for Asian countries in the last 20 years.
Indian crude basket expected to cross $75
According to Anindya Banerjee, head of commodity research at Kotak Securities, the number of ships passing through the Strait of Hormuz is still 60 to 70 percent less than on normal days. The market expected that the prices would remain normal once the war subsides, but due to this sudden controversy, the Indian Crude Basket is ready to cross from the current $68 to $75 per barrel.
Rupee will fall against dollar, burden on common man will increase
Devarsh Vakil, Prime Research Head, HDFC Securities, has made it clear that even if India does not buy oil directly from Iran, our import bill will become huge due to increase in global prices. Oil companies will have to buy more dollars for payments, which will weaken the Indian rupee and increase the current account deficit (CAD). Motilal Oswal’s Commodity Analyst Manav Modi cautioned that natural gas is also becoming expensive due to attacks on LNG ships, due to which the prices of CNG, PNG and petrol-diesel in the domestic market may spoil the budget of the common man in the coming days.