The petrodollar system that came into existence in the 1970s has come under stress, with oil being traded increasingly in non-US denominated currencies.
The prevailing environment has underlined the importance of a balanced market to the oil producers. India has been consistently reiterating the need for oil to be priced responsibly to ensure the stability of the oil market.
The September 14 strikes targeting Saudi oil refineries demonstrated an exceptional level of mission accomplishment that is possible with drones today. In the coming times, drones are likely to get an increasing share in augmenting the decisive role of air power.
While there is no immediate shortage of oil as the market is balanced for the time being, there are growing concerns about potential conflict in the region leading to supply disruption and resultant price spike, affecting the already nervous market sentiment.
As concerns over a potential conflict in the region grow, the pressing issue of what a conflict would mean for the price of international crude oil needs to be addressed urgently.
A strategic petroleum reserve offers India the leverage to be a serious player in the international oil market, as it will have the option to release supplies when prices spike and recharge the reserve when prices are low.
Given that Iran accounts for around 10 per cent of India total oil imports, the immediate factor for New Delhi will be to look at various options to deal with the situation without jeopardising its energy security.
President Trump’s decision to withdraw from the Iran nuclear deal has sent oil prices soaring again. Even prior to the May 8, 2018 announcement, after falling to below $30 a barrel in early 2016, oil prices were on the boil again, belying the projections of market analysts, including those of the respected International Energy Agency (IEA), that the era of $100 plus per barrel of oil was over. The projections were based on the assumption that nations would move increasingly away from oil—and coal—to meet their carbon mitigation commitments under the Paris Agreement.
