crude oil cooling

A global recession, if it happens, would be bad for everyone, including India. For now, though, those concerns are taking a breather from the cold by helping calm demand expectations and, in turn, crude oil prices, which hit a 15-month low on Thursday. Brent was trading below $75 per barrel and US WTI near $70 per barrel. Some of this may be part of the volatility generated by the coming to light of bank weaknesses, with major central banks struggling to shore them up. Switzerland’s monetary authority on Thursday opened a window for crisis-hit Credit Suisse to borrow up to $54 billion, after the Fed took action in the US. But higher oil inventory levels are also helping soften the prices. So far, New Delhi has saved India’s economy from the oil shock of the Ukraine war by buying crude from Russia, although our gains have been found to be less impressive than first anticipated. We import more than four-fifths of our oil needs, and any easing of cost pressures is welcome. The current inflation forecasts of the Reserve Bank of India project a $95 per barrel price level. If real prices remain low, this will increase the likelihood of a rate hike as overall retail price stability will be easier to achieve.