Brent crude oil plays a vital role in shaping India’s economy, as the country ranks as the second-largest importer of crude oil globally. This benchmark oil sets the price India pays to meet its vast energy needs, influencing everything from transportation to industrial production. A rise in Brent prices directly impacts inflation, raising costs for consumers and businesses. Since India relies heavily on imported crude, any fluctuation in global oil prices significantly affects the nation’s fiscal health and trade balance. The country’s energy security and economic growth are closely tied to Brent crude’s performance on the global market.
Global Crude Oil Price
Global oil prices show a clear downward trend now. The US market fears a big slowdown ahead. This cuts America’s need for oil sharply. Meanwhile, China’s economy faces tough challenges. Factories in China need less oil these days. As the world’s biggest oil buyer, China’s lower demand affects global prices. Moreover, the chances of a war spilling out between Israel and Iran in the Middle East look highly unlikely.
Furthermore, Saudi Arabia keeps pumping enough oil. Russia continues selling despite global issues to fund its war in Ukraine. These changes push oil prices lower each week. Therefore, India spends less on its oil needs now. Subsequently, this helps keep inflation under control. The government can plan its budget better and can add to its FOREX reserve
Many Indian companies seem to benefit from the drastic fall in the global crude oil prices:
Paint industry gains the most. These companies use oil products to make colors. Stocks like Asian Paints, Berger Paints, and Indigo Paints stand to benefit from this as oil is one of the major raw materials for the paint industry.
Aviation Companies: IndiGo saves huge money on plane fuel. Fuel makes up 40% of airline costs. Considering the festive season and upcoming holiday season in the country IndiGo stands to gain big with falling oil prices.
FMCG: Companies like ITC, Hindustan Unilever, Nestle, Marice, and PGHH will end up shelling less for transport and packaging, thus saving a huge amount of money. This would further enhance the profit margin for the companies.
Oil Marketing Companies: HPCL (Hindustan Petroleum Corporation Limited), BPCL (Bharat Petroleum Corporation Limited), and IOCL (Indian Oil Corporation Limited) will benefit from this as the profit margins of these companies tend to increase with the falling crude prices.
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Other Economic Benefits
As the Indian government has to shell less money the rupee stays stronger against other currencies. Trade deficits shrink as oil bills reduce. Local businesses will have higher growth with lower operating costs. This is eventually reflected in the stock markets as the business
mood remains positive in the country. The future looks promising with manageable oil prices. India’s position in global trade improves steadily.
Written By: Dipangshu Kundu
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