Amidst the current whirlwinds of strife and uncertainty caused by the insertion of the ISIS in the Middle East equations, which are anyway constantly juggling with complex variables, how will the price of crude play itself out when ever tightening sanctions are being wound around the neck of the Russian bear? Common wisdom amongst economists is that Russias resource extractive economy stays in clover if crude prices stay at $100 per bbl or above; below that level, Russia is faced with yawning deficits. The West in all likelihood will manipulate the crude market to ensure that prices fall below the benchmark of $100 so that Russia is forced to cede ground in eastern Ukraine. Russia may respond by cutting off gas supplies to Europe but then will be bereft of a prime income stream. It is reported that several countries of Western Europe are steadily stockpiling gas for just such an eventuality. What is the big takeaway for India in this scenario ? If oil prices drop below $100, then the economic outlook may begin to acquire a rosy hue and the long awaited achhe din may become a reality ! Keeping fingers crossed for such an eventuality. As the Chinese are wont to say , we are surely living in interesting times !
Posted on: Sun, 14 Sep 2014 17:45:16 +0000
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