Tension in the Gulf region means the possibility of rising inflation in India
Friday - January 3, 2020 2:19 pm ,
Category : WTN SPECIAL
The tension between the US and Iran again increases
Crude oil prices rise due to American airstrike, petrol-diesel prices may hike in India
JAN 03 (WTN) - If the apprehensions are proved to be true, then petrol-diesel prices may increase drastically in the coming days, and the general public may have to bear the brunt of the increase in petrol-diesel prices. In fact, after the news of the death of Iran's General Qasim Sulemani in the US airstrike in Iraq's capital Baghdad, there has been an increase in crude oil prices worldwide. The Iraqi militia has claimed that 7 others were killed in the US airstrike, besides the head of the Elite Quds force, Iranian Major General Qasim Sulemani. Brent crude prices have risen by $ 3 to $ 68 per barrel in a few minutes after this airstrike and fear of retaliation by Iran.
Naturally, because of crude oil prices expensive in the international market, the import of crude oil will be expensive, and the cost of crude oil will increase the price of petrol-diesel in India. For your information, let us know that in the last one week, the price of petrol has increased by almost one per cent. India imports about 80 per cent of its crude oil. In such a situation, the cost of crude oil is going to affect the economy of India.
Indeed, tensions in the Gulf region between the US and Iran may increase even more after the US airstrike, and tensions in the Gulf region may reduce crude oil supplies. Now, as the supply of crude oil will decrease, it is bound to increase the prices of oil. According to oil economy experts, the increase in the price of crude oil by $ 10 per barrel has a direct negative impact on India's fiscal deficit and current account balance. That is the cost of crude oil increases, it burdens on India's GDP by 0.10 to 0.40 percent. On the other hand, if the crude oil prices increase by $ 10 per barrel, the GDP growth rate can come down by 0.2 to 0.3 percent.
For your information, let us know that due to the crude oil being expansive in the international market, crude oil in the Indian basket will also become expensive. Due to the cost of crude oil, there will be pressure on Indian big oil companies to increase the price of petrol and diesel if crude becomes expensive. Naturally, as diesel is expensive so transportation will also be expensive, and there is a fear of rising inflation due to expensive transportation. As you are aware that inflation is a huge political issue in India, then even a small disturbance in the Gulf region can be responsible for inflation in India.
As we told you earlier that India imports about 80 per cent of its crude oil. In such a situation, the current account deficit can increase due to rising crude oil prices. Explain that due to the cost of crude oil, India's import bill will be expensive in the same proportion, and in this situation, the situation of current account deficit will deteriorate. Now that this will affect the economy, it is natural that it will directly affect the common man of the country. According to experts, if crude oil continues to be costlier in the future, it may cause the Indian currency rupee to depreciate against the US dollar, with the current account deficit increasing.
Let you know that it is not necessary to say that the current account deficit is always harmful to any country. In fact, in developing countries like India, there may be a short-term current account deficit to increase local production and future exports, but if there is a long-term current account deficit, it can cause a major setback to the economy.
It is clear that controlling inflation in India depends to a large extent on the peace of the Gulf region. If history is considered, since the Gulf War in the early 90s till now, whenever the tension in the Gulf the region had increased, the people of India had to suffer because of inflation. As you know, for a long time the battle for supremacy in the Gulf region between Iran and America has been going on, so if after the death of Qasim Sulemani, Iran attacked the interests of America or Israel in the Gulf, then it would disrupt the supply of crude oil, and if the supply of crude oil is disrupted, then it is bound to increase inflation in India.
JAN 03 (WTN) - If the apprehensions are proved to be true, then petrol-diesel prices may increase drastically in the coming days, and the general public may have to bear the brunt of the increase in petrol-diesel prices. In fact, after the news of the death of Iran's General Qasim Sulemani in the US airstrike in Iraq's capital Baghdad, there has been an increase in crude oil prices worldwide. The Iraqi militia has claimed that 7 others were killed in the US airstrike, besides the head of the Elite Quds force, Iranian Major General Qasim Sulemani. Brent crude prices have risen by $ 3 to $ 68 per barrel in a few minutes after this airstrike and fear of retaliation by Iran.
Naturally, because of crude oil prices expensive in the international market, the import of crude oil will be expensive, and the cost of crude oil will increase the price of petrol-diesel in India. For your information, let us know that in the last one week, the price of petrol has increased by almost one per cent. India imports about 80 per cent of its crude oil. In such a situation, the cost of crude oil is going to affect the economy of India.
Indeed, tensions in the Gulf region between the US and Iran may increase even more after the US airstrike, and tensions in the Gulf region may reduce crude oil supplies. Now, as the supply of crude oil will decrease, it is bound to increase the prices of oil. According to oil economy experts, the increase in the price of crude oil by $ 10 per barrel has a direct negative impact on India's fiscal deficit and current account balance. That is the cost of crude oil increases, it burdens on India's GDP by 0.10 to 0.40 percent. On the other hand, if the crude oil prices increase by $ 10 per barrel, the GDP growth rate can come down by 0.2 to 0.3 percent.
For your information, let us know that due to the crude oil being expansive in the international market, crude oil in the Indian basket will also become expensive. Due to the cost of crude oil, there will be pressure on Indian big oil companies to increase the price of petrol and diesel if crude becomes expensive. Naturally, as diesel is expensive so transportation will also be expensive, and there is a fear of rising inflation due to expensive transportation. As you are aware that inflation is a huge political issue in India, then even a small disturbance in the Gulf region can be responsible for inflation in India.
As we told you earlier that India imports about 80 per cent of its crude oil. In such a situation, the current account deficit can increase due to rising crude oil prices. Explain that due to the cost of crude oil, India's import bill will be expensive in the same proportion, and in this situation, the situation of current account deficit will deteriorate. Now that this will affect the economy, it is natural that it will directly affect the common man of the country. According to experts, if crude oil continues to be costlier in the future, it may cause the Indian currency rupee to depreciate against the US dollar, with the current account deficit increasing.
Let you know that it is not necessary to say that the current account deficit is always harmful to any country. In fact, in developing countries like India, there may be a short-term current account deficit to increase local production and future exports, but if there is a long-term current account deficit, it can cause a major setback to the economy.
It is clear that controlling inflation in India depends to a large extent on the peace of the Gulf region. If history is considered, since the Gulf War in the early 90s till now, whenever the tension in the Gulf the region had increased, the people of India had to suffer because of inflation. As you know, for a long time the battle for supremacy in the Gulf region between Iran and America has been going on, so if after the death of Qasim Sulemani, Iran attacked the interests of America or Israel in the Gulf, then it would disrupt the supply of crude oil, and if the supply of crude oil is disrupted, then it is bound to increase inflation in India.
