New Delhi: India is one among many other global countries worried about soaring oil prices after oil facilities in Saudi Arabia were hit by drone attacks by Yemen-based terrorists. India is getting ready to brace itself from the shock of oil price rise and have already begun talks with the biggest oil company in the world, Saudi Aramco.
10 drones had attacked the Abqaiq and Khurais oil facilities and has disrupted around half of the oil capacity of Saudi Arabia or around 5.7 million barrels of oil a day (mbpd). Reports suggest that this is considered one of the biggest setback to global oil supplies since Saddam Hussein’s invasion of Kuwait and even bigger than the 1979 Islamic revolution in Iran.
However, an Indian official said that Saudi Aramco has assured India that there would not be any shortages in supplies. The official said, ” Yesterday, Saudi Aramco officials informed the Indian refiners that there would be no shortage of supplies to them. MoPNG (Ministry of Petroleum and Natural gas) is closely monitoring the situation in consultation with Indian refiners and Saudi Aramco.”
The oil price rise could adversely affect Indian economy already under pressure because of a fear of global recession and the US-China trade war.
Saudi Arabia, which accounts for 10% of the global oil supply, is the second biggest of oil supplier to India. With India being the world’s third largest oil consumer this could spill serious trouble for Indian economy.
The price rise of oil could also strain the trade deficit of India and raise the oil import bill of India.
However, with inflation under control, the Indian government will have more breathing space to adjust to the eventual price rise of oil.
The price rise could be severe if the situation in the Middle East escalates. The Indian government is monitoring the situation and keeps its fingers crossed. The price could ease as soon as the tensions in the region subsides.