Narendra Modi’s Role in Crude Oil Crash Published 3 days ago by Krishna.S.SantoshIts true. Narendra Modi, the charismatic Prime Minister of India played his part in the global crash of Crude Oil. No wonder he is admired by people in India and Indians across the world.Ever since he was elected the Prime Minister with a thumping Majority, he proclaimed that he would work closely with Russia. He started taking baby steps towards sourcing oil from Russia instead of relying solely on Iran and Arabia who were routinely over-charging Indians on Oil. Modi Negotiated with Russians and I believe the Russians even agreed to accept Indian Rupee for transactions. So on December 11, 2014 when Modi had invited Vladmir Putin to India, he struck a deal with Russia to import oil from them to the tune of US$ 40 Billion (USD 10+ Billion each year, about 61000 crores annually at present exchange rates) in the forthcoming years (in.reuters/.../india-russia-energy...).Prime Minister Narendra Modi has assured Vladmir Putin, who is on a visit to Delhi, that India opposes any form of sanctions against Russia. The prime minister has pitched for more cooperation and bilateral trade ties with Russia. Narendra Modi and Putin have agreed to increase the oil imports from Russia by 40 times the present levels. This would significantly reduce India’s reliance on Arabian peninsula for oil. Arabia will not longer be a dictator as far as pricing oil is concerned. The reduction in pricing by Arabs is to ensure that they do not loose big markets to Russia which is aggressively pursuing new markets for selling its Oil and Nuclear Technology at a fair price.Being a BRIC nation, China followed Narendra Modi’s footsteps and started buying oil from Russia (deal signed on December 22, 2014 – responding to Narendra Modi’s initiative). Obviously China has much greater demand and it was nine times greater than what Indian government planned to buy from Russia. The huge demand for oil from India and China were a considerable factor in pricing the oil globally. Arabian countries almost had the monopoly in pricing it.Coincidentally USA discovered its own reserves of Oil and the need to import from Arabian countries reduced. The demand fell all of a sudden. This led Arabian union to reduce oil prices drastically. This is also one of the important reason as to why Crude Oil has crashed to this level.Consistent with his style of functioning and his corporate vision, Narendra Modi announced that Government will only focus on governance and oil companies would source oil from Russia. Subsequently, Essar signed a multi-billion dollar oil deal with Russia’s Rosneft spread over 10 years. [livemint/.../Essar-Oil-signs-10year-crude...]. This in turn would create ample job opportunities for youth of India.Narendra Modi and his Chinese counterpart have categorically stated that they would not be paying for Russian oil in US dollars. This is a landmark decision which is sure to cause an impact across the globe. This may further accelerate the decline on the value of dollar and would help in strengthening Indian Rupee and Chinese Yuan. Narendra Modi has asked the Oil Ministry to investigate and discover new Oil fields in India for auction. India at this point, is not self-sufficient as far as Oil is concerned. If the discovery of new oil fields are significant, it would slowly make India self-sufficient in Oil thereby reducing the need to depend on Russia.Given all these facts, you can expect oil to reduce further down. It would stay that way for a good period of time until some other developments drive it north. But until then, lets give Narendra Modi the credit where it is due!
Posted on: Fri, 23 Jan 2015 09:55:22 +0000