2021 has seen a big recovery in international oil prices by as high as 47% from $ 48.86 on 1.1.21 per barrel to $ 71.81 per barrel on 15.6.21. This levels of $ 70+ were seen last only in late 2018. Oil is at a 2.5 year high currently.
This meteoric rise in oil prices is attributed to global economic recovery which fuels higher oil demand. This economic recovery is attributed to high levels of vaccination in many developed countries. With this price increase OPEC countries will be happy and there is scope for increase in production which may slightly reduce increases, but short term outlook for oil is bullish and it may go up further.
Challenge for India will be already high oil prices due to high levels of taxes on oil will further push oil prices to new highs and trigger further inflation which is already high at levels of 6.3% in May 2021. Government should now look to taper the price of oil by reducing taxes on oil and prevent a run away inflation due to oil.
No comments:
Post a Comment