Letter to BS: Oil supply, price after Aramco attack a cause for concern

This refers to “Oil price surges; Govt plays down concerns” (September 17). An anticipated fall in oil supply from Saudi Arabia in the wake of the drone attack on Saudi Aramco is a cause for concern to India, which is already experiencing economic slowdown. It is also not trading with Iran. However, despite the assurance provided by the government of adequate availability of oil and of adequate inventory of oil by Saudi Arabia, pricing is of equal concern as an excess of demand over supply will increase the prices. 

Intra-day price fluctuations for Brent crude oil is also a cause for anxiety. Time is crucial for the market and economic confidence to be restored. The need, therefore, is to tread with caution to offset the crisis. This may have a domino effect. If the cost of imports increase, the cost of production will go up leading to lower productivity, a fall in revenue inflow both from domestic and export markets, inflation, and finally retrenchment of labour and increase in unemployment. This impact might be felt across the economy starting with agriculture, small, medium and village industry, and retail trade adversely impacting the gross domestic product.

C Gopinath Nair, Kochi

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