Global oil for free, why not price fall in India

News Desk

Globally, oil price have fallen over 300%, which is said to be a historic low with crude oil ending at a negative $37.63 a barrel, just a day before.

If this is considered, it should mean that, price of oil in India should come down as well. As India imports oil from the Organisation of the Petroleum Exporting Countries (OPEC) countries. Then why is it not happening.

If this is not happening here are the reasons to it. Asian currencies, including Indian, are trading weaker against the US Dollar and this is one point to be considered while thinking why price fall is not visible. With India being an importer of oil the Rupee-Dollar difference is a key reason why the oil price is stable yet.

Oil prices went a new low primarily due to the steep collapse in demand. This because of the lockdown in various countries is in place to curb the spread of COVID-19.

The fall in oil prices generally goes well for the dalal street as India imports the commodity in huge quantities and lower prices mean lower trade deficit and lower inflation. Higher oil price adversely affect tyre manufacturers, footwear, paints. A fall in oil prices will drive production cost lower and stock prices higher.

Every rise of $10 per barrel oil price leads to a 0.55% increase in the current account deficit. A fall in the crude oil will have a positive impact on India’s current account deficit situation.

Above all the lockdown has reduced out oil demand too to a considerable zero litre per day hence it is not the prime concern.