Just last month, record high bets were placed on rising oil prices due to supply disruptions in Iraq. However, oil prices have surprised once again. Despite the tensions surrounding the Middle East, Africa and Ukraine, the Brent crude oil price has slipped as OPEC has pumped more supplies. What has further kept price under control is the low demand from the US and higher gasoline inventories. In fact, all these factors are likely to account for the biggest monthly loss in oil prices over last 15 months.
While the trend bodes well for India, as it largely depends on oil imports, the risk to Indian energy sector does remain. This is because dollar still remains strong, supported by US economic growth data. Further, OPEC is quite known for changing supplies as per its whims and a further cut down cannot be ruled out. As India hopes to introduce regulatory reforms in the energy sector, a rise or volatility in oil prices is likely to slow down the pace of the same.
While the trend bodes well for India, as it largely depends on oil imports, the risk to Indian energy sector does remain. This is because dollar still remains strong, supported by US economic growth data. Further, OPEC is quite known for changing supplies as per its whims and a further cut down cannot be ruled out. As India hopes to introduce regulatory reforms in the energy sector, a rise or volatility in oil prices is likely to slow down the pace of the same.
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