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Continuity of Oil Glut : Loss for Oil Producers, Gain for India

News

One of the longest global oil gluts is expected to save India close to Rs 1.50 Lakh crore in 2015-16. To put that sum in perspective, it would be enough to cover the Centre's school education, health, women and child development budgets and pay for the rural jobs scheme.

Source:  ET

SNP Insights

Continuity of oil glut & hence lower price, will benefit Indian Govt. heavily, due to lower subsidy burden & hence better fiscal deficit scenario. Key beneficiaries would be oil importer like Indian Oil & Reliance, as it will strengthen their balance sheet & give scope for investment in new projects. This low price trend will raise profit margin of petro chemical companies also. As both petrol & diesel are market linked in India, end consumers will get cheap fuel & hence keeping inflation at check. As at present condition no oil producers are reducing their production, in fear of losing their market share, it would be interesting to see till when this oil glut continues & its implication on Indian market.

Source: SNP Infra Research