Oil prices in the international market have fallen by more than $ 4 a barrel this week to a four-month low after the OPEC+ cartel planned to allow production to increase this year, while a rise in crude oil reserves in the US has further fuelled bearish sentiments. India has every chance to benefit from this. According to IANS news, benchmark Brent oil futures for August fell to $ 77.50 on Wednesday, while July crude oil futures on WTI (West Texas Intermediate) were at $ 73.22.
Prices now below $80 a barrel
According to the news, oil prices have now fallen below $80 per barrel for the first time since February 7. This is a good sign for the Indian economy as the country imports about 85 percent of its crude oil needs and any fall in oil prices reduces the country’s import bill. This reduces the current account deficit (CAD) and strengthens the rupee. Apart from strengthening the external balance, the fall in oil prices also reduces the prices of petrol, diesel and LPG in the domestic market, which reduces inflation in the country.
Russia is now the largest supplier of crude oil to India
The government has also helped reduce the country’s oil import bill by allowing oil companies to buy Russian crude at discounted prices despite Western pressure in the wake of the Ukraine war. The Narendra Modi government has been steadfast in maintaining its ties with Russia despite sanctions imposed against Moscow by the US and Europe. Russia has now emerged as the largest supplier of crude oil to India, replacing Iraq and Saudi Arabia, which previously held the top spot. India has in fact become the largest buyer of Russian seaborne oil, accounting for nearly 38 per cent of India’s total oil imports in April.
Big savings in the country’s oil import bill
According to an ICRA report, the price of oil imports from Russia was 16.4 per cent and 15.6 per cent lower than the corresponding levels from Gulf countries in the 11 months of FY23 and FY24, respectively. India’s strategy of continuing to buy cheaper oil from Russia has resulted in savings of about $7.9 billion in the country’s oil import bill during the first 11 months of FY2022-23 and has also helped the country reduce its current account deficit. Since India is the third largest importer of crude oil in the world, these large purchases of Russian oil have also helped keep prices in the world market at a more reasonable level, which has also benefited other countries.
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