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Straight from the Specialists

How falling crude prices affect India

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(Any opinions expressed here are those of the author and not necessarily those of Thomson Reuters)

Brent crude prices have dropped below $100 a barrel, causing anxiety within the Organization of the Petroleum Exporting Countries (OPEC) and giving some relief to India and China. The market is bearish at present but the future is unpredictable.

A gas pump is seen hanging from the ceiling at a petrol station in Seoul June 27, 2011. REUTERS/Jo Yong-Hak/Files The fall in prices is largely due to subdued demand by consumers and oversupply by some OPEC producers. An added reason is the increase in U.S. production from shale. The next OPEC meeting to review oil supplies is in November but an early decision on quotas cannot be ruled out.

Oil is critical for India. For one, India imports more than two- thirds of its requirement, which constitutes 37 percent of total imports. A one-dollar fall in the price of oil saves the country about 40 billion rupees. That has a three-fold effect spread across the economy.

India Markets Weekahead: Time to prune positions in an extended honeymoon

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

The Nifty closed at a new closing high of 7,954 amid volatility in an eventful week that started with the Supreme Court ruling that the allocation of more than 200 coal blocks over the past two decades was illegal.

With nearly 3 trillion rupees at stake, this had a direct effect on the metals and power sector. It also affected banking, which has exposure to the two sectors.

Scary oil

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

Today’s fragile global economy faces many risks: the risk of another flare-up of the euro zone crisis; the risk of a worse-than-expected slowdown in China; and the risk that economic recovery in the United States will fizzle (yet again). But no risk is more serious than that posed by a further spike in oil prices.

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