Govt concerned over Iraq impact on oil prices

With its heavy reliance on imported oil from Iraq making it vulnerable to the conflict there, the new government is concerned over the impact spurt in oil prices may have on its plans to resuscitate the economy.

Crude oil prices rose for a third day today as militants in Iraq seized more territories and US President Barack Obama warned the crisis may spill over into other countries.

"Iraq is a concern for us... The impact (of violence in Iraq) on oil prices and supplies," a top government source said.

Crude oil prices have shot up to a nine-month high of over $115 per barrel. Since India imports 79 per cent its oil and subsidies fuel, higher oil prices are particularly painful for Asia's third-largest economy.

Spurt in oil prices could exacerbate the country's fiscal and current account deficits as well as its already-high inflation rates.

The fourth-largest oil consumer in the world imported 190 million tonnes of oil in 2013-14. About 13 per cent of this came from Iraq, second only to Saudi Arabia which supplies about 20 per cent of India's oil imports.

Oil prices rising is certainly a matter of concern, the source added.

So far oil production in Iraq has not been disrupted as the violence is restricted to mostly northern and western parts of the country.

Southern Iraq accounted for more than 85 per cent of the country's 3.1 million barrels a day of production in April and all of its 2.5 million bpd of exports are shipped by ship tanker from the Persian Gulf.

West Texas Intermediate (WTI) for August delivery today rose as much as 62 cents to $107.45 a barrel in electronic trading on the New York Mercantile Exchange while Brent gained 61 cents, or 0.5 per cent, to $115.42 a barrel.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • India is still in denial about the reality of marital sexual abuse

    When Haribhai Parathibhai Chaudhary, our minister of state for home, declared in Parliament the other day that there was no such thing as marital rape

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

TODAY'S COLUMNS

Varun Dutt

<b>Riskfactor</b>: Overdose of hope

As a conservative estimate, at least half of all new ...

Zehra Naqvi

Translated nuances

Translating a book from another language is a tough job, ...

Bubbles Sabharwal

Don’t let bullies get away, stand up to them

Boarding schools can be like a totalitarian regime. It can ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture