The transformation in the oil market aids India

This has been fuelled by renewables, natural gas and a tech revolution

Oil prices were once the Damocles sword over the Indian economy. That may be changing, though not because of any internal reform. The change has come from the technological revolution in oil supply and the spread of renewables and natural gas on the demand side. The world today is awash in oil. Despite cuts by the Organisation of Petroleum Exporting Countries (OPEC), sanctions on Iran, production collapses in Venezuela and Libya, global oil prices are today only $60 a barrel.

The 1973 OPEC oil crisis and the Persian Gulf war of 1991 brought India to its knees. (REUTERS)

India is extraordinarily susceptible to oil crises. The 1973 OPEC oil crisis and the Persian Gulf war of 1991 brought the country to its knees. The first one triggered inflation and social unrest that, arguably, led to the Emergency. The second caused a balance of payments crisis, forcing India to pawn its gold reserves. But the age of black fear is entering its twilight. The oil sector is today unrecognisable. A decade ago, the United States’ Energy Information Administration predicted oil prices would be $100 today. The most striking error was predicting that the US would be importing eight million barrels of oil a day when it has instead become a net exporter. A war that blocks all Gulf oil exports would still plunge India into recession. But today, it is buyers who have the advantage. Which is why Saudi Arabia and Iraq offer to guarantee supplies to India, the world’s fastest-growing importer of the black gold.