OPEC’s decision to pump up volumes is expected to ease pressure on fuel prices and government math, giving the NDA dispensation the flexibility to continue with social sector spending into next year’s general elections.
Energy ministers from the cartel of 14 oil exporting countries, which accounted for 38% of global supplies in 2017, on Friday decided to raise output by a million barrels per day to reduce prices and fill possible supply gaps from reduced shipments from US sanctions-hit Iran and nosediving Venezuelan production.
Agency reports quoting analysts, however, said only a third of the production hike target may flow into the market due to capacity constraints in major OPEC members such as Iraq and Iran. In such a case, it won’t be enough to hold back prices if shipments from Iran and Venezuela shrink further.
All this could limit the benefit for India, which imports 80% of its oil needs, as can be gauged from the fact that benchmark Brent jumped 2% to $74.74 shortly after the OPEC decision. Read More