CRUDE SHOCK

A rising trend of crude oil prices has once again come to haunt the country, threatening to widen the current account deficit (CAD), weaken the rupee and further stoke inflation.

- M.G. Arun

CAD refers to the situation where the total value of goods and services India imports exceeds the total value of its exports. Crude oil prices in the global market rose to 10-month highs in the past few weeks as large producers like Russia and Saudi Arabia cut supply, and reserves of fuel and crude remained low. This has led to the price of the benchmark Brent crude rising over 14 per cent in the international market in just over a month—from $82.9 a barrel on August 24 to $95 on September 29. There are fears that crude prices may breach the $100 mark by early next year.