A big decline has been seen in the prices of crude oil.
There has been a major upheaval in the history of the global energy market and international diplomacy, which has shocked the entire world. A historic peace agreement (US-Iran Peace Deal) has finally been reached between America and Iran, which were staunch enemies of each other for a long time. After this grand agreement, a huge decline has been recorded in the prices of crude oil in the international market.
If we look at the figures, since June 10, crude oil of Gulf countries has become cheaper by more than 15.70 percent. Whereas the price of American crude has seen a decline of more than 16 percent. Till the time of writing the news, a decline of 6 percent was seen in the prices of crude oil. This means that the price of crude in the international market has fallen below $80 per barrel. This means that the crude oil of Gulf countries has reached its lowest level in about 105 days.
The special thing is that India is actually celebrating the decline in crude oil prices after this global peace. This historic deal between America and Iran is going to prove to be a big ‘game changer’ for the Indian economy. Let us understand closely how big a lottery this recession in crude oil is for India and is this relief going to last for a long time?
Why did the prices of crude oil fall drastically?
Due to the stringent American sanctions imposed on Iran for the last several years, it was not able to sell its crude oil openly in the global market. Apart from this, due to fears of war in the Middle East, the prices of Brent Crude were always skyrocketing. Now that the peace agreement has been reached and the way has been cleared for lifting the sanctions on Iran. So the prices of crude oil are coming downwards rapidly. Iran has huge reserves of oil, and as soon as it came into the market, the global supply of crude oil has suddenly increased. Experts say that due to the abatement of the threat of war in the Gulf countries, the ‘geopolitical risk premium’ has disappeared from the prices of crude oil, due to which the prices have come down rapidly.
How did the ‘lottery’ open for the Indian economy?
- India imports more than 85 percent of its crude oil requirement from abroad. In such a situation, a fall of even one dollar in the prices of crude oil in the international market brings a profit of billions of rupees to India.
- Transportation cost in India is directly related to the prices of diesel and petrol. Due to cheaper oil, freight transportation will become cheaper, which will reduce the prices of fruits, vegetables and everyday items. The common man can get great relief from inflation.
- India has to spend the most dollars to import crude oil. Due to oil becoming cheaper, the country’s foreign exchange reserves will be saved and the Indian Rupee (INR) will strengthen against the dollar.
- The current account deficit of the government will come under control, which will give the government the freedom to spend more money on infrastructure, health and education within the country.
Big question: Will this oil remain cheap forever?
Now the biggest question is whether this oil recession (Cheaper Oil) will last for a long time? Market analysts believe that the situation is very favorable for India in the short term. However, long-term stability will depend on how OPEC+ countries react to this deal. If OPEC countries cut oil production on their part, prices may get support again. But at the moment, Iran’s return to the market is so big that prices are not going to go up any time soon.
This peace agreement between America and Iran is not only a diplomatic victory for the two countries, but it is also a big booster dose for emerging economies like India. If these low prices of crude oil continue for the next two-three quarters, then India’s GDP growth rate is sure to get a new momentum and greenery can be seen all around on Dalal Street as well.
crude oil
current price of crude oil
A huge decline has been seen in the prices of crude oil. Since June 10, crude oil prices have fallen by more than 16 percent. If we look at the data, on June 10, Brent crude of Gulf countries was at $ 93.10 per barrel, which came down to $ 78.46 per barrel. This means that the crude oil of Gulf countries has become cheaper by $ 14.64 per barrel i.e. 15.72 percent. On the other hand, a big decline has been seen in the price of American crude oil WTI. On June 10, the price of WTI was $ 90.03 per barrel, which is currently seen at $ 75.53 per barrel. This means that the price of crude oil has seen a decline of 14.5 dollars per barrel i.e. more than 16 percent.
