As international oil prices head higher, India will have to brace itself for the economic risks of expensive energy. Oil price dynamics have often been explained by changes in the supply outlook influenced by the decisions of major oil producers. Oil trading at $70 should offer some respite to traditional oil producers like the OPEC members, which have suffered the onslaught of U.S. shale producers. But as rising oil prices put pressure on domestic consumers, the government will have to desist from resorting to subsidies to ease the pain. An even bigger risk posed by higher oil prices is to the government’s fiscal management.

Source: The Hindu January 27, 2018 00:33 UTC