In Iran, the Iran-backed Houthi Baghi Group's attacks on Saudi Arabian oil reserves are also heard in India.

Posted on 9th Mar 2021 by rohit kumar

In Iran, the Iran-backed Houthi Baghi Group's attacks on Saudi Arabian oil reserves are also heard in India.

 

After an attack on Saudi Arabia by the Houthi rebels on Sunday, the price of crude oil (the price of benchmark Brent crude) in the international market rose by almost three percent to $ 71.37 per barrel. This will also affect India because the dependence of the country's economy is largely on the import of oil.

 

In the initial weeks of the pandemic that began after February last year, the price of Brent crude (crude oil) had dropped to $ 20 per barrel. Since that time, it has increased by 83 percent so far, which is one of the major reasons for the rising prices of petrol and diesel in India.

 

Saudi Arabia produces the most oil in the world and it is the largest country to export oil to India. India is the third-largest oil-importing country after the US and China, and last year it imported 85 percent of its petroleum product, on which it spent $ 120 billion.

 

Impact on Indian Economy

 

Therefore, the attacks on Saudi Arabia have a direct impact on India's economy.

 

According to a report by the Reserve Bank of India, for every $ 10 per barrel increase in the price of crude oil in the international market, India's import bill increases manifold.

 

On the other hand, the prices of petrol and diesel at petrol pumps also increase. These days, for the first time in some cities of India, the price of petrol has reached 100 rupees per liter.

 

According to Prateek Gupta, an expert on the import and export of crude oil and petroleum products and chairman of Gupta Commodities in Mumbai, the war in the Gulf countries for the last six years has brought uncertainty in the oil market.

 

He says, "India wants peace to be established between Saudi Arabia and Yemen's Houthis, because the ongoing war between the two has increased the prices of crude oil and it is not good for India's economy."

 

But according to RS Sharma, former chairman of Oil and Natural Gas Corporation Limited (ONGC), the price of oil which rises due to attacks on Saudi Arabia are for some time. After a day or two, the prices start decreasing again.

 

He says, "All the experts in the world are predicting that oil prices will increase this year. I think prices will not increase in the international market, because Russia and America will increase the production of oil, due to which the supply of oil in the market will be solid." And the price will be under control. "

 

On Sunday, the spokesperson of Iran-backed Houthi Baghi Group Yahiya Saari claimed that the group fired eight ballistic missiles at Saudi Arabia and attacked 14 drones-laden drones.

 

Saudi Arabia's Ministry of Energy has admitted that the Ras Tanura export terminal was attacked by a drone on Sunday, in which no lives or goods were damaged.

 

Ras Tanura is the world's largest oil terminal, capable of exporting about 6.5 million barrels a day, which is 7% of the world's demand for oil. It is one of the safest terminals.

 

Houthi rebels attack

 

Six years ago, after the civil war in Yemen, the Shia Houthi militia captured the northern part of the country and the capital Sanaa. Saudi Arabia said that this militia has the support of Iran. It mounted a Houthi militia in Yemen in 2015 by forging military alliances with some Gulf countries such as the United Arab Emirates.

 

In this war, more than 12000 people have been killed and millions have become homeless. The United Nations says that the world's worst humanitarian crisis has arisen in Yemen due to the war.

 

Donald Trump had declared Houthi rebels as extremists during his tenure, but that decision was withdrawn after Biden became president. Since then drone and missile attacks inside Saudi Arabia of Houthi rebels have increased. Sunday's attack was the second time in a week.

 

These attacks have increased the difficulties of the Biden administration. Also, the international oil market has become unstable. Due to this uncertainty, the price of oil is increasing. On the other hand, OPEC, the organization of oil-producing countries, has reduced the production of oil, so that the demand increases and the oil prices too.

 

The Government of India had appealed to Saudi Arabia and other big oil-producing countries to increase the production of oil so that oil prices can be reduced. But these countries turned down India's demand.

 

RS Sharma, an oil expert and former chairman of ONGC, says, "Uncertainty in the oil market. Petrol and diesel prices found at petrol pumps in the country are linked to international market prices. This means that if the oil in the international market If the prices are reduced or increased, similar fluctuations should be seen in India. But this has not happened in the last six years.

 

Oil serves as fuel for the development of India's huge economy. If oil prices continue to rise, then inflation, GDP, and current account pressure will increase. Due to which the health of the economy may deteriorate and this can have a serious impact on demand and then economic development will also be affected.