Dip in crude oil rates and what influences the fluctuation?
Posted on: 01/Mar/2016 3:02:57 PM
Among the most important commodities is oil. The economy of a nation largely depends on oil including here in India.
Indian stands as one among the potential importers of oil. Nearly 70 percent of oil used in the country is sourced through imports. Hence oil price is highly influential in the nation. In the year 2015, there was a dip in price by 17 percent following the 47 percent decline in 2014. According to experts in the field, about 30 US dollars per barrel is the expected dip in price in 2016. What causes such a dip in price? Take a look at the key factors in the following
- The primary reason is the increasing tension between Sunni dominated Saudi Arabia and Shia dominated Iran. Both of these, as known to everyone are the nations that make maximum oil produce. This is the primary reason for such decline in price
- Dip in demand particularly in Asia which is the largest economy and energy consumer
- There is large overhand and this has left all the storage tanks in a predicament with managing excess oil. As of July 2016, the production of domestic crude oil is hiked to 9.6 barrels in the USA. There was a similar upsurge in production in Canada as well
- There is lesser reliance on crude oil due to Shale gas revolution in USA. This has a great influence on the global oil price as about 20 percent of oil production across the world is consumed here in this nation
How to it benefit India?
Due to falling prices of crude oil, India saves billions of dollars. This helps in narrowing the country`s account deficit.
There is a huge impact caused by the falling crude oil rates particularly in goods transport and services. This fall in price will lead to dip in rates of tyre, paint, etc and hence many industries get benefited.
