Grim Pandemic Statistics in India and Japan Worry the Crude Oil Markets

 

Covid-19 in India and Japan

The rising Covid-19 infections – and deaths – in both India and Japan have dampened the positive sentiment that we saw at the beginning of the week in crude oil markets.

The fall in crude oil price for the third successive day clearly reflects the anxieties felt by the investors over the state of affairs in the world’s third and fourth largest users of the commodity in the face of the latest challenge.

In India, the latest data as well as the ground realities paint a grim picture: the supply of oxygen has been a critical issue that is vital to saving lives; migrant workers from relatively poor states are on the move back to their villages in large numbers, which creates its own logistical challenge; crematoriums are full and in some parts of the country funeral pyres are lit in the open.

Having anticipated the catastrophic impact on the economy that just showed some improvement, the states are reluctant to go into full lockdown; they know all too well how difficult it is to revive – once again, having been in the same situation last year; India experienced the worst economic slowdown in 70 years due to the pandemic last year.

Due to local travel restrictions, people choose to stay indoors and the public transport has been downgraded to essential skeleton services.

The demand of petrol and diesel has clearly gone down and so has the import of crude oil.

Indian government, having launched a fairly successful vaccination rollout, did not anticipate the resurgence of the infection on this scale; judging by what happened last year in the world’s second most populous nation, it will take months before normalcy returns.

Up until then, the Indian economy will slide into an inevitable, relatively passive phase with far reaching consequences for those who rely on the lucrative Indian markets – for months to come.

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