THE US will outstrip Saudi Arabia as the world?s largest oil producer in 2014 thanks to its shale rocks that have turned prolific ? in Jan-June this year it produced 15% more crude than Saudi Arabia.
Even reduced supplies from strife-torn Iraq as well as Libya and Nigeria haven?t raised prices since, at the same time, global demand has also fallen. This implies reduced OPEC influence on supplies and could lead to further easing of prices, benefiting countries like India which are large net importers of fuel. Brent crude has already dropped 12% since January.
A lower oil import bill can yield economic-wide gains for India, as it would reduce the PSU oil marketers? under-recoveries which constrains PSU oil producers? capital spend, besides being a stress on the fisc. With the previous government hiking diesel prices regularly, there is no subsidy here any more and completely freeing up diesel prices could be easy.