Resources | VOL. 15, ISSUE 94, January-February 2016

Falling Oil Prices and India

Currently the oil market sentiment is depressive, as the world economy has seen a decline of crude oil prices by 75 per cent (Investing, 2016) and has settled at 29.42 USD in The New York Mercantile Exchange (NYMEX) for the first time in 12 years (Puko, & Kantchev, 2016). This means that the crude prices have dropped lower than during the financial crisis in 2008-2009. Basically the decline in crude prices can be narrowed down to a simple demand supply economics. The domestic production of the United States has increased by 71 per cent from 2008 to 2014 (BP, 2015), which made the exporting countries look for newer markets to export the spare supply which otherwise was earlier consumed by the US. On the supply side, the Brazilian, Canadian and Iraqi oil production is increasing year after year, making the demand supply equilibrium awry. For example, the production of oil in Brazil increased by 23.6 per cent from 2008 to 2014 whereas the production of Canada and Iran increased by 35.3 per cent and 33.8 per cent respectively during those years. The increase of production from 2013 to 2014 for these three countries were 2.9 per cent, 5 per cent and 3.8 per cent, respectively (BP, 2015). The Iranian oil came to be part of the export market as the economic sanctions were lifted from...

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