Why is crude oil up so sharply and what does it mean for India?

During the week, the price of Brent crude rallied to $83/bbl in the Brent market and this was after the oil cartel, OPEC, refused to ramp up production. This was despite the concerns of tight global supply. In the last couple of weeks there were also inventory drawdowns in the US but that appears to be changing which could be a slightly redeeming feature for oil prices. However, oil is already at a 7-year high and the upsides still look to be there.

At a macro level, the landed cost of Brent is up more than 50% in one year and that is widening the trade deficit which is already hit by the fact that India relies on imports for 80% of its daily crude needs. This is also adding to the inflationary pressures. In addition, natural gas prices have soared by 62% for H2. This could have an impact on monetary policy, which could be clear once the RBI announces its monetary policy on 08-Oct.