French bombing of IS in Syria to have little impact on oil prices

Crude oil production from Saudi Arabia and other OPEC countries has ensured there are no supply cuts

Last week's terrorist attack in Paris and the retaliatory air strikes by France on the Islamic State's (IS) Syrian stronghold of Raqqa is likely to have little impact on global crude oil prices, which have remained subdued for about a year now. Crude oil production from Saudi Arabia and other Organization of the Petroleum Exporting Countries (OPEC) countries has ensured there are no supply cuts.

"There has always been a lot of tension in oil-producing countries, whether it is Nigeria, Libya or Algeria. This is an amazing industry, which is very resilient to disturbances. Even today in Syria, oil is produced and exported by ISIS," Michiel Soeting, global chairman energy and natural resources sector, KPMG, told Business Standard. He, however, added that despite major disturbances ultimately impacting supply, historically, the world has been able to deal with it.

India's Petroleum Minister Dharmendra Pradhan, too, said "some latest events" might impact global oil prices in the days to come, but the overall the prices would remain "reasonable".

As on Monday, Brent crude oil was trading at $41.50 a barrel. Crude oil prices have come down from $105 a barrel in 2014 to $41 a barrel now. "If there is going to be one country benefiting from this slide in prices, it is India," said Pradhan, addressing an industry event here on Monday.

The government's subsidy burden is expected to come down to Rs 30,000 crore in the current financial year from Rs 65,000 crore in FY15.

According to International Energy Agency (IEA), global oil supplies breached 97 million barrel a day (mb/d) in October, as non-OPEC output recovered from lower levels the previous month. "Despite the resilience of producers such as Russia, non-OPEC supply is forecast to contract by more than 0.6 mb/d next year. US light tight oil, the driver of non-OPEC growth, is expected to decline by 0.6 mb/d in 2016," IEA said in a report on Friday.