According to the latest Bloomberg reports the crude oil witnesses its biggest January gain in at least 30 years. The exponentially increasing demand for post-pandemic relaxation across the world is not being able to meet the consumption demand.
The global benchmark settled above US$91 a barrel, posting a 17 per cent gain this month. In fact, top banks and oil companies say prices may soon pass US$100 a barrel.
Apart from the post-pandemic factor, other reasons are equally contributing to this increment. For example-
1) Tension in Middle-East
As the tension soars up between Yemen and Saudi Arabia, the world is witnessing its impact on crude oil. Two weeks ago Yemen’s Houthi rebels did a drone attack on three oil tankers in Abu Dhabi that killed three people, including two Indians. In response to this, Saudi Arabia launched airstrikes targeting the Yemeni capital of Sanaa.
2) Ukraine- Russia- America Tension
Russia is massing up troops near Ukraine which is being a major sense of concern for America as they fear Crimea-style annexation attempts by Russia. America is dealing with a firm fist on this matter However, Russia has denied any such intentions, but has also warned America to not interfere including his other NATO states.
Impact on India
The increase in crude oil will impact the Indian market which is already bearing the brunt of high oil prices.
However, the state cannot take the risk of increasing the oil prices amidst important assembly elections in five states scheduled for this month. In fact, On November 23, India said it will release five million barrels of crude oil from its strategic petroleum reserves in a concerted effort with other major oil-consuming countries such as the US, China, UK, Japan and South Korea, to bring down global crude oil prices. (Report by India Today)
It is being speculated that high crude prices, may upset the fiscal calculations of the Union government close to the Budget presentation on February 1.