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Pradhan assures refiners on crude oil supplies

High oil impact on Indian economy


High oil impact on Indian economy


Pradhan (file pic).

Petroleum and Natural Gas Minister Dharmendra Pradhan has assured on 23 April 2019 of additional crude oil supplies to Indian refiners following Washington threat of sanctions if dealings with Iran is not stopped from 1 May 2019.

The loss of Iranian crude oil supply means higher oil prices which are already posing a challenge to the Indian economy.

High oil is “a key Achilles heel” for the Indian economy, complicating its inflation, current account, fiscal balance and currency outlook, cautioned Singapore’s DBS banking group in its market report on 23 April 2019.

The United States ended six months of waivers on imports of Iranian crude oil by eight biggest buyers, mostly Asian refiners.

A Petroleum and Natural Gas Ministry issued a statement on the announcement by US to discontinue the Significant Reduction Exemption to all purchases of crude oil from Iran.

“The Government of India has put in place a robust plan to ensure that there is adequate supply of crude oil to Indian oil refineries from May 2019 onwards,” said the statement.

“There will be additional supplies from other major oil producing countries from different parts of the world,” the Ministry assured.

“The Indian refineries are fully prepared without any problem to meet the national demand for petrol, diesel and other petroleum products in the country,” said the statement.

“The sharp rally in oil weighed on all asset classes; USD-INR jumped to 69.87 high before closing slightly lower, while equity markets ended in red,” wrote Economist Radhika Rao and FX Strategist Philip Wee of the DBS Group Research in the report.

The duo also cautioned on the bond markets, saying the worry is two-pronged – concern is that high oil prices might pose a fresh risk to the fiscal math (if subsides return), by extension requiring higher borrowings.

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