India and its oil-dynamics. We spoke last week about the two key known unknowns that the global and domestic markets were closely tracking. This week, we take a look at India's oil dynamics. Before we get to the specifics, it is very important to note here that a rise in...(1/9)
...oil prices in itself does not matter. It is why they rise that is of more importance. If the increase in oil prices is because of an increase in demand, then it remains a positive. This is because like a rising tide lifts all boats, the increase in oil prices...(2/9)
...(in this scenario) is a result of growing demand globally and domestically. It is because of this that the secular rise in oil prices to $76 in 2007 from $23 in 2003 was not seen to have any negative macro stability implications. However, if the rise in prices is on...(3/9)
...account of supply-disruptions, when the inherent demand (domestic) is weak, this could have negative- implications. What level can that be? Analysts note here that if non-OPEC members do not raise supply sharply (raise seen unlikely now), prices could stay range bound...(4/9)
...for a while. They also note that $80/bbl crude prices, could start eating into demand; rather demand erosion/disruption starts setting in. There is a silver lining here. India's FDI inflow has remained strong in the last few years and for FY21 net FDI inflows ($43.2bn)...(5/9)
...held up to FY20 levels ($43bn). Ideally, we have seen FDI inflows into India to be a function of global risk appetite. The last few years have seen some delinking. If the above read is true and if FDI inflows into India are on a structural uptrend, then this could...(6/9)
...greatly create a buffer (through capital account inflows) and finance any pressures that rising oil imports could create into the years ahead. This could also reduce volatility in India's rupee depreciation trend. Now for the numbers around crude price impact. Every...(7/9)
...10% increase in crude prices increase the current account deficit by 0.3% GDP, pushes up CPI inflation by 0.4% y/y, and WPI inflation by 0.8% y/y. On the fiscal, the impact will depend on how much the government is willing to cut its fuel duties; that eventually pulls...(8/9)
...down its excise duty collection. Sensitivities suggest that a Rs1/litre cut in fuel excise duty could lead to a drop in excide collections by around 0.06% GDP. (9/9)

• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with Arjun G Nagarajan

Arjun G Nagarajan Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @arjungn80

7 Jul
Immediately after a sharp runup in crude, a drop appears to have puzzled some. The drop in crude appears to be largely on the back of a moderation in the earlier run-up in price. Heres a quick backdrop on the entire issue. During the pandemic, the OPEC+ countries...(1/12)
...agreed to production cuts that would span a broad 2Y period of May'20 to Apr'22. This was to keep crude prices from collapsing on the back of a sharp drop in demand caused by the pandemic. The production cuts peaked to around 10.3mn barrels per day (mbpd) in June'20,...(2/12)
...coinciding with the peak of COVID-19 globally. In Jul'20, it was agreed to taper the production cuts to 7.5mbps till Apr'21, as demand started picking up. All of this went broadly as per plan. In Apr'21 it was decided that the production cuts would be tapered...(3/12)
Read 12 tweets
6 Jul
We need to learn to live with COVID-19 and its variants. This appears to be what bellweather economies seem to be saying. While we are all aware of the US opening up, almost entirely in July, Singapore, and UK stand out in particular. Singapore is moving away from a...(1/7)
...“Covid-Zero” strategy of completely stamping out the virus from its country through strong border controls/aggressive contact tracing/social distancing. Singapore is now moving to a strategy that focussess on reopening its economy through mass-vaccinations with...(2/7)
...a broad assumption that COVID-19 would not completely exit the country for the next few years. Singapore also senses that it is falling behind its western counterparts on the recovery trajectory. It plans to live with the virus that would be contained through...(3/7)
Read 7 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!