Crude Oil Bill Jumps 56% in 2018 - Chart Of The Day 10 September 2018 - Equitymaster
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Crude Oil Bill Jumps 56% in 2018
Sep 10, 2018


I've been writing about the threat of rising crude oil prices since May 2018. (Alert: Narendra Modi's Best Friend Is Stabbing His Back Right Now)

In May 2014, when Narendra Modi took charge as the Prime Minister of India, crude oil prices had been firmly above the US$ 100 per barrel level.

But as luck would have it, crude oil prices started crashing right after Modi came to power. Between May 2014 and January 2016, crude oil prices crashed 74%.

This gift of lower crude oil prices was the biggest boon to the Modi government.

The sharp drop in crude oil prices corresponded with declining inflation. This, in turn, allowed the RBI to lower interest rates.

Such a benign inflation and interest rate environment was ideal to revive the investment cycle and the economic growth engine. The Indian stock markets gave a thumbs-up to these favourable economic factors.

But now, just when the economy is on the verge of revival, Modi's 'best friend' is betraying him. Crude oil prices are rising.

Today's Chart of the Day shows India's crude oil and petroleum products import bill for the period April to July over the last four years.

You can see that the crude import bill was substantially lower in the April-July period of the previous three financial years. In the latest financial year, however, the import bill has shot up 55.6% year-on-year.

And it is hardly any wonder that the rupee has been tumbling lower and it currently at a life-time low against the US dollar.

Given we're in an election year, it will be interesting to see how the government responds to these economic shocks and how market participants react in the stock markets.

Data Source: Petroleum Planning & Analysis Cell

This Chart Of The Day was published in The 5 Minute WrapUp - Is the Indian Market's Bull Run Under Threat?

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