Finance & Economy | News & Insights

Macro Impact of Higher Crude Prices on India

Published: September 15, 2023
Author: TEXTILE VALUE CHAIN

Highlights:

  • The recent surge in crude oil prices is primarily due to supply reduction announcements from key players such as Russia and Saudi Arabia.
  • Nevertheless, sluggish global consumption demand is expected to counteract this supply-demand gap starting from 2024.
  • Retail prices are unlikely to increase as there would be pressure on oil marketing companies (OMCs) not to hike retail petrol/ diesel prices. Thus, there would be no impact on inflation.
  • The impact on fiscal balance is also expected to be minimal as OMCs will take most of the burden of higher fuel prices.
  • The full-year current account deficit (CAD) will likely increase by ~ 20 basis points (bps) to 1.8% of GDP if the Indian crude basket averages ~ USD 90 per barrel for the remainder of the fiscal year.

Macro_Impact_of_Higher_Crude_Oil_Prices_on_India

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