Turmoil over crude oil: How India may face shockwaves emerging from escalating Russia-Ukraine tensions
India Today
Crude oil prices have surged to a seven-year high as tensions escalated between Russia and Ukraine. Prices are expected to remain at elevated levels in the near term.
Russia may have welcomed India's "independent position" on the Ukraine crisis. But even if Moscow believes India’s views on the issue at the UN Security Council was reflective of the special and privileged strategic partnership between the two countries, the escalating tensions in Europe are bound to have a global effect, including here in India.
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Even as India‘s direct dependence on Russia for crude oil imports is low, the former’s overall crude dependency on imports is very high. Thus, if the global oil market dynamics are disturbed, India is poised to suffer. India imports nearly 85 per cent of its oil requirements, which includes only around six per cent of refined petroleum and nearly two per cent of crude oil from Russia. However, Russia is the third-largest producer of crude oil and thus significantly drives the global oil market.
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“Russia accounts for one in every ten barrels of oil consumed globally, so it is a major player when it comes to the price of oil and it's really going to hurt consumers at the petrol pumps,” Navneet Damani, Sr. Vice President for Commodity and Currency Research, Motilal Oswal Financial Services, told India Today.
Crude oil prices have surged to a seven-year high as tensions escalated between Russia and Ukraine. Prices are expected to remain at elevated levels in the near term.
“OPEC and its allies will stick to its current agreement to add four lakh barrels per day of oil, rejecting calls to pump more to ease pressure on prices. Also, backwardation in crude oil widened to a level not seen since 2004, indicating tight supplies and correlates with low stock,” Sriram Iyer, Senior Research Analyst for Commodities and Currencies at Reliance Securities, told India Today.
