Rising crude oil price will likely widen India’s fiscal deficit and stoke inflation. Given this, there seems to be a strong case for India to take concrete measures to reduce its high dependence on imported crude oil and diversify its sources of energy.
Global oil markets are seeing shift in dynamics, with the US emerging as the leading supplier. It is expected to account for 70 per cent of the increase in global production capacity by 2024. Moreover, there will be an increase in contributions by non-OPEC countries such as Brazil, Canada, Norway and Guyana, according to a report by the International Energy Agency (IEA).
The changing oil dynamics may have an impact on India, whose annual volume of demand will increase and will equal China’s by 2024. Together India and China will account for 44 per cent of the global demand for crude oil by 2024, said IEA report.