To the uninitiated, it may seem like an exaggeration that the political brawl in Afghanistan, which is neither a major oil-producing nor a major consumer, would affect world crude prices.
But the impact of such confusion and uncertainty could easily spill over into the region, including Iran and other countries such as Saudi Arabia and the United Arab Emirates, which are the major oil producers in the region. world. Saudi Arabia is the second largest oil producer in the world, exporting around 59% of its crude.
“What happens in Afghanistan in the near future will have an impact on oil prices, especially if the Taliban revert to their old ways and allow sanctuaries for Islamic fundamentalists in the Middle East, North Africa and Asia. power station rich in hydrocarbons, “energy expert Narendra Taneja said in a tweet. noted.
“If they change, it won’t be the Taliban,” he added.
Taneja told India Narrative that if the unrest was limited to the Afghan borders, the impact would be limited. But if Afghanistan continues to boil, and boil violently, the oil-producing regions of the Middle East and Central Asia could be affected and, therefore, oil prices, ”he said.
Barrons, a Dow Jones & Company publication, said tensions in the “Middle East have the potential to push prices up.” He noted that previously JP Morgan had predicted that oil prices could reach $ 80 a barrel with increasing demand and limited supply.
Matt Gertken, head of geopolitical strategy at BCA Research, a global investment strategy provider, in an interview with Barrons, however, said that OPEC (Organization of the Petroleum Exporting Countries) 2.0 “has regained discipline after last year’s market share wars. “” The group won’t want prices to rise too much, which would accelerate global environmental efforts. The most likely outcome is increased volatility in oil prices, “he said he said, quoting Barrons.
The price of Brent crude hit $ 66.74 per barrel on Tuesday. Global oil prices have risen throughout 2021, driven by hopes of an economic recovery. The major oil-producing countries had also cut back on their supplies.
The increase in world crude oil prices has a direct impact on the Indian economy. It could be even harder at this point, especially since the country, which imports more than 80% of its total crude needs, is still grappling with the aftermath of the Covid 19 pandemic.
Domestic prices for gasoline and diesel are already at an all time high.
Meanwhile, India has already started to diversify its oil import markets to reduce its dependence on certain exporting countries. Countries like the United States and Nigeria have become major suppliers of crude to India.