Rising oil price is becoming a hot political issue - globally

 

Oil prices at the pumps are on the rise, both in the developed world and those in the developing world.

It’s almost universal in proportion to the recent rise in crude oil prices.

The immediate impact on the economies in the developed world, however, is more significant and there are signs that it’s becoming a hot political issue.

In India, for instance, the rise in oil price is felt across many segments of the Indian society and the government is under fire for not dealing with it.

The Indian government, meanwhile, without denying that it is the case, blame it on the global crude oil prices.

The opposition, however, blames the rise in oil price on government taxes.

As the Covid-19 infections are on decline to a manageable level, the focus of the government of India has been on reviving the battered economy.

India is the third largest crude oil importer of the world and the Indian government wants its suppliers in the Middle East take that on board, when it comes to the price of the commodity.

In April last year, when the OPEC+ stuck to production cuts, India made its displeasure known to the oil producers in the Middle East; it even escalated to a spar between Indian oil minister and his Saudi counterpart.

In the wake of the recent, unprecedented Coronavirus outbreak in India, however, the dynamism of politics has changed: the relationship between India and the Arab nations of the Middle East dramatically improved, as the latter came forward to assist India in its hour of need – by supplying LMO –liquid medical oxygen – for a considerable period of time, while easing the burden on the Indian government.

India will reciprocate the gesture; that’s why there was no official opposition against the recent hike in oil price for Asia by Saudi Arabia; Saudis, on their part, reduced the price of oil for Asia during the recent wave of the pandemic, giving a breathing space for the struggling nations in the region.

In this context, the Indian refineries, in all probability, will keep buying oil from Saudi Arabia while burying the hatchet – reversing an earlier decision to the contrary, made in May.

This is more likely as the prospect of complementing the crude oil supply from Iran is still a distant reality due to the slow progress made in talks among the signatories to the JCPOA in Vienna, Austria.

India is not the only country that feels the pinch when crude oil price rises. Of course, the temptation is to demonize the oil producers for the development. That, however, is just one piece of the crude oil jigzaw.

The following chart shows the part that most people do not see - or refuse to see - when it comes to the oil saga: