InvestorQ : What is your view on oil at $70/bbl? Will it suit all countries and is India going to benefit or lose?
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What is your view on oil at $70/bbl? Will it suit all countries and is India going to benefit or lose?

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Dilmini Mercia answered.
2 months ago
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Broadly, I think $70 should be acceptable to all countries on the buy side and the sell side. That is a good level to assure good gross refining margins or GRMs for oil players as we saw in the latest quarter. Oil companies are also gaining from inventory translation gains and even Indian oil companies need steadily higher prices. Anything below $45/bbl means that oil is priced for a global recession. It also compensates the oil producers.

Let me turn my attention to what this means for India. Surprisingly, Indian economy has tended to do well when oil prices are buoyant. However, above $70/bbl would have been uncomfortable. With a potential fiscal deficit of 6.8% of GDP in FY22, there is little room for excise and VAT cuts by the centre or states. Oil topping at $70/bbl and staying in a range, suits most nations and India is no exception.

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