India to tap into national oil stocks to combat rising oil prices, other nations suffer from rising prices
India, the world’s third-biggest oil importer is prepared to release additional crude oil from its national reserve in hopes to cool off prices. Prices of Crude oil rose by 8% to $105 per barrel on Thursday 24th of February after Russia invaded Ukraine, the highest it has been since 2014(The same year as Russia’s first attempted invasion of Ukraine, annexing Crimea in the process). The price currently has dropped to $91.93 as of 11:30 am IST on 27th February 2022. The sudden rise in oil prices was due to the concern regarding disruption of oil supply caused by Russia’s Invasion of Ukraine.
The government is closely monitoring international markets as well as potential supply disruptions. According to a statement released by the oil ministry,” India is committed to supporting initiatives for releases from strategic petroleum reserves for mitigating market volatility and calming the rise in crude oil prices,”
India’s Strategic reserves have a hoarding capacity of 5.33 million tonnes, equivalent to 39 million barrels. This is sufficient for 9.5 days according to the pre-pandemic FY20 consumption patterns.
Nations are seeing the effects of oil prices caused by Russia’s Invasion of Ukraine. Fuel prices rose in Sri Lanka and Pakistan (Rs.10 per litre). The American Automobile Association(AAA) predicts the price of gas to rise from $2.66 in March to $3.54 per gallon. Chief economist at RSM Joe Brusueles says that rising oil prices can push inflation to 10% year over year because of the conflict. He has also said oil prices will rise to $110, increasing consumer prices to 2.8%. Alan Detmeister, an economist from UBS told the New York Times that if oil prices hit $120, inflation could go up by 9% in the coming months. American President Joe Biden has promised the American people that he will protect them from the sudden rise in prices, however, a rise in oil price may cause limited consumer spending, hurting the economy.
All in all, Russia’s Invasion of Ukraine isn't only threatening to the people of Ukraine, it may hurt other countries and their citizens both physically and economically.
Written and collated by Rajat Pujar
Written with input from the Economic Times, Times of India, NDTV(Background information), Business Standard and Bloomberg(Background Information)