Oil Price Rise Brings India Close to an Economic Crisis

20 minutes ago, Marina Schwarz said:

Union minister Nitin Gadkari Thursday said the country is facing lot of "economic crisis" due to crude oil imports and need to reduce imports and increase exports.

Exports? Really? With this kind of local demand?

Some analyst reduced demand forecast for the rest of 2018 by 300,000 bpd this morning due to demand destruction in emerging markets.

I'm sure hedge funds will say "well we don't believe it" upward momentum saved!

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It's kind of cute how they believe themselves, or at least believe others believe them. And they do... Okay, not so cute.

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48 minutes ago, Marina Schwarz said:

Union minister Nitin Gadkari Thursday said the country is facing lot of "economic crisis" due to crude oil imports and need to reduce imports and increase exports.

Exports? Really? With this kind of local demand?

Living in denial, which is the first stage, I believe? 

"India produced 32,642 thousand metric tonne (TMT) of crude oil in the eleven months between April 2017 and March 2018, a marginal 1 per cent decline as compared to the output in the same period last fiscal (April-Feb 2016-17), and a record seven year low, according to data sourced from the Petroleum Planning and Analysis Cell (PPAC), an arm of the oil ministry."

https://energy.economictimes.indiatimes.com/news/oil-and-gas/india-records-lowest-crude-oil-production-in-seven-years/63640955

India is not prepared to export more oil. 

Exporting refined product, maybe, but even that seems a losing prospect: "news report actively shared on social media based on RTI reply on exports claims that India is exporting refined petrol to 15 nations at Rs 34 per litre while refined diesel is exported to 29 countries at Rs 37 per litre as per the information provided...While the price of petrol during this period hovered between Rs 69.97 to Rs 75.55 per liter and diesel was Rs 59.70 to 67.38 per liter."

Let's move on to the next stage, shall we?

 

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1 hour ago, Marina Schwarz said:

Union minister Nitin Gadkari Thursday said the country is facing lot of "economic crisis" due to crude oil imports and need to reduce imports and increase exports.

Exports? Really? With this kind of local demand?

India is good at some things.  Arbitrarily reducing numbers to make other numbers move is one of them.  A question for our Indian friends: Is India an emerging market, or a world player that competes with China?

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India is cutting its excise taxes on oil & gas so that will help to lessen the impact of rising prices.

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(edited)

1 hour ago, ATK said:

Some analyst reduced demand forecast for the rest of 2018 by 300,000 bpd this morning due to demand destruction in emerging markets.

I'm sure hedge funds will say "well we don't believe it" upward momentum saved!

Who are those analysts?  Is the 300k bpd spread out across all emerging markets, or just India?  If it is across all EMs, then wouldn't it follow that the "demand destruction" in India specifically is less than 300k?

Another point that requires emphasis is "said the country is facing lot of "economic crisis" due to crude oil imports".  Really?  Due to crude oil imports?  Not because of other things?

If our friends would seriously address bureaucratic red tape that makes doing business in India, for Indians and foreign investors, difficult and expensive and slow slow slow, they would shock themselves with how fast they could pull themselves up by their bootstraps and really start competing in the world.

Edited by Dan Warnick
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1 hour ago, Dan Warnick said:

Who are those analysts?  Is the 300k bpd spread out across all emerging markets, or just India?  If it is across all EMs, then wouldn't it follow that the "demand destruction" in India specifically is less than 300k?

Another point that requires emphasis is "said the country is facing lot of "economic crisis" due to crude oil imports".  Really?  Due to crude oil imports?  Not because of other things?

If our friends would seriously address bureaucratic red tape that makes doing business in India, for Indians and foreign investors, difficult and expensive and slow slow slow, they would shock themselves with how fast they could pull themselves up by their bootstraps and really start competing in the world.

I will find the article I read this morning, but no of course it's not because of just oil. Its also due to an increasingly strengthening dollar vs weakening local currencies in EM exacerbated by large debt loads in foreign banks. 

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18 minutes ago, ATK said:

I will find the article I read this morning, but no of course it's not because of just oil. Its also due to an increasingly strengthening dollar vs weakening local currencies in EM exacerbated by large debt loads in foreign banks. 

The other headline about India is that they are also looking form multi-billion dollar loans to pay for their oil and foreign debt, so you are certainly right about that.  My point is more about the fact that oil & gas should be a sideline activity for India.  A sort of "also" within their economy, instead of the appearance that they are reliant on O&G and the markets to prop up the majority of the economy.

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With the next general election due to be held in India in april or may 2019 an economic crisis fueled by high energy prices is the last thing the Modi government needs. It will soon face a choice between  maintaining discounted iranian oil imports and risking a diplomatic crisis with the US or comply with US sanctions and face a 6$ increase in the oil price generating a domestic economic crisis. My bet is that they will rather choose the diplomatic crisis rather than the economic crisis.

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ALMOST ALL THE COMMODITY IN INDIA  IS UNDER GST REGIME IF THE GOT. DECIDE WITH THE HELP OF STATES CONSENT THEY CAN BRING ALL THE 

PETROLIUM PRODUCTS  UNDER GST; THE PEOPLE  OF INDIA CAN GET PETROL AND DIESEL NEARLY RS. 14 ( RUPEES FOURTEEN ) CHEAPER THAN PREVAILING PRICE

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