Lower crude oil prices, pandemic fears to impact various sectors
Mumbai: When the going gets tough, tough measures get going. With major cities and trading centres across the globe putting restrictions on travel, and some in lockdown mode, economic activity is expected to slow down at a fast clip. This worry is paramount in the minds of investors, as the impact of a prolonged slowdown will be far greater than the benefit for India from lower crude oil prices. The country imports more than 80% of its oil requirements.
The price of Brent crude had already dropped from $66 a barrel on 31 December to $45 a barrel on 6 March owing to concerns on demand. But with the Organization of the Petroleum Exporting Countries and allies failing to reach a consensus on supply cuts, a price war triggered a further drop to about $34 per barrel.
Lower crude prices have a positive impact on India’s current account deficit and inflation. But, the simultaneous impact of Covid-19 changes the landscape, with nobody being sure if things will progressively improve or deteriorate hereon.
