While there is no immediate shortage of oil as the market is balanced for the time being, there are growing concerns about potential conflict in the region leading to supply disruption and resultant price spike, affecting the already nervous market sentiment.
As concerns over a potential conflict in the region grow, the pressing issue of what a conflict would mean for the price of international crude oil needs to be addressed urgently.
With US sanctions in place on the Venezuelan oil industry, global oil prices are set to rise once again, which may have major geopolitical and geo-economic consequences.
A strategic petroleum reserve offers India the leverage to be a serious player in the international oil market, as it will have the option to release supplies when prices spike and recharge the reserve when prices are low.
The upper riparian China is uniquely positioned to influence the flow of Yarlung Tsangpo/Brahmaputra into lower riparian India. In the absence of a water sharing treaty, the Chinese decision to build more dams on Yarlung/Brahmaputra and continued evasiveness on its long-term plans would remain an issue of major concern for India.
Given that Iran accounts for around 10 per cent of India total oil imports, the immediate factor for New Delhi will be to look at various options to deal with the situation without jeopardising its energy security.
Despite the easing of international crude prices, the central government is unlikely to cut central excise duties since a cut of Re 1 would result in a loss of revenue of Rs. 10,725 crore.
The International Solar Alliance (ISA) Summit on 11 March marks an important milestone in India’s leadership efforts to build a clean and sustainable global energy future.
China’s launch of a yuan-denominated oil futures exchange will provide it with the opportunity to create an Asian crude oil benchmark and give it more clout in crude pricing and for promoting the yuan as a truly global currency.
The Abqaiq Attack – Fallout on Oil Market
While there is no immediate shortage of oil as the market is balanced for the time being, there are growing concerns about potential conflict in the region leading to supply disruption and resultant price spike, affecting the already nervous market sentiment.