InvestorQ : Have oil prices found a bottom finally and what could be the implications for India of such low oil prices?
shrinidhi Rajan made post

Have oil prices found a bottom finally and what could be the implications for India of such low oil prices?

Answer
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Riya Dwivedi answered.
5 months ago


After a 65% correction in oil prices in 3 months, Brent prices got some support after the US and Russia agreed to talks to manage supply better. With the OPEC-Russian deal breaking up, the US has moved in to strike a deal with Russia. Oil has touched a 18-year low after the COVID-19 compressed oil demand by 30% and Saudi Arabia decided to flood the oil markets. For India the low oil prices could make current account deficit (CAD) vanish. Bank of America has estimated that India’s CAD for FY21 could actually become zero. India relies on oil imports for ~85% of its oil needs and so weak prices will result in a huge wealth transfer to India. That will be positive for the External ratings of India as well as the INR.