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E-mail ID will not be published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

  • Those willfully defaulting on loans should be blacklisted by Sebi

    As reported by this newspaper’s Monday edition, the Securities and Exchange Board of India (Sebi) has found merit in the Reserve Bank of India’s s

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Arun Kumar Jain

Kickstarting technological innovation

One of the key dimensions of global competitiveness is the ...

Kuruvilla Pandikattu SJ

Developing moral, spiritual capacity

Writing in The Huffington Post, Noam Chomsky, professor emeritus, MIT ...

Gautam Gupta

Manufacturing must keep workers’ welfare in mind

It may be early days yet, but the labour reforms ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture