Digital Desk: For the first time since 2014, Brent oil price rises to $100 per barrel after Russia's dramatic escalation of the Ukraine crisis stoked fears of a disruption to the region's vital energy exports. Russia is the world's second-biggest oil producer, selling crude primarily to European refineries, and is Europe's top natural gas supplier, producing around 35% of the continent's supply.
Today, Russian President Vladimir Putin announced a "military operation" in Ukraine and called on soldiers there to lay down their guns, ignoring Western indignation and international calls to avoid a war. Putin made a surprise announcement on television about his plans.
"Sanctions requiring Russia to deliver less crude or natural gas would have significant consequences for oil prices and the global economy. Russia consumes one out of every ten barrels of oil consumed globally, making it a big role in oil price. It's really going to harm consumers at the petrol pumps," said Navneet Damani, Sr. Vice President - Commodity & Currency Research, Motilal Oswal Financial Services.
Despite rising worldwide costs, Indian Oil Corp., Bharat Petroleum Corp., and Hindustan Petroleum Corp., who together control more than 90% of the domestic market, have kept petrol and diesel prices fixed for more than three months. However, analysts predict that after India's state elections are over next month, gas and diesel prices will skyrocket, putting pressure on the government and the central bank to take a step to keep inflation under control.
"The surge in crude prices raises inflationary, fiscal, and external sector risks for India. Crude oil-related products account for over 9% of the WPI basket directly. As crude oil prices rise, the subsidy on LPG and kerosene is projected to rise as well, increasing the subsidy bill. India is Ukraine's largest export market in the Asia-Pacific region, and the sixth largest worldwide. Pharmaceuticals, reactors/boiler machinery, mechanical appliances, oil seeds, fruits, coffee, tea, and spices are among India's significant exports to the European country. The majority of Indian exports to Ukraine are pharmaceuticals." he added.
Moreover, as per analysts, the Iran nuclear deal could act as a temporary brake on prices, with rumours circulating that a new agreement could be revealed soon. Indirect nuclear talks between the US and Iran have been taking place in Vienna, with an agreement potentially removing sanctions on Iranian oil shipments and increasing world supply.
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