Rising Covid-19 Cases in India: this may affect the oil demand and the price

 

Covid-19 in India and Oil Price

 

In India Covid-19 cases are rising rapidly and for the first time the Central government issued the warning that the next four weeks will be critical for the country.

There is an exponential growth in the state of Maharashtra where the commercial capital is and New Delhi, the capital of the country.

In response, the government says that accelerated testing and vaccine programmes are underway; India has been vaccinating its citizens for some time, yet infections are surging as most people just drop their guard, especially in social events and gatherings.

Although state-wide lockdowns are not imminent, the authorities will run out of options if the rate of infections continues to rise at this rate.

As an inevitable outcome, the road traffic will come down and demand for fossil fuels will follow the pattern in proportion; since the world’s third largest consumer imports 80% of oil, it will have an impact on the buyers, especially from the Middle East, as well.

To make matters worse for the buyers, India is to cut 36% of its oil import from Saudi Arabia, starting from May in response to the recent price hike by the latter to Asia; the two sides were involved in a verbal spat over the production cuts and it shows no sign of abating – at present.

The upsurge of the pandemic in India has the potential to make the  global oil price fluctuate, owing to the sheer size of its oil imports; this is something that we can expect in the next weeks.

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