NEW DELHI: Oil could once again prove to be Prime Minister Narendra Modi’s friend at a time his government is grappling with economic slowdown. The end of the three-year marriage between Saudi Arabia-led OPEC and Russia, coming amid faltering global demand due to economic impact of the coronavirus outbreak, could hammer oil prices below the $40/barrel mark, various estimates say.
For India, which imports 83% of its oil, an extended spell of low prices will bring down fuel prices faster and leave money in the government’s kitty for incentives to revive growth without pulling back on social spending.
Moscow jilted OPEC at Friday’s crunch talks in Vienna for deepening the current production cut to nearly 4% of global supply. Riyadh responded by announcing discounts of $6-8/barrel and plans to raise production up to 12 million barrels per day, or 23% higher than the current level. Other West Asian producers will certainly take the cue, which will set off a price war and deepen the glut.
