GEOPOLITICAL IMPACT ON OIL PRICES: Social, Political or Economic DR. RABI BASTIA

THE DYNAMICS OF “PETRO-TECTONICS” 1985-86 1990-91 2008-09 2014-Till Date Period Nov 1985- Mar. 1986 Nov. 1990- Feb. 1991 Jul. 2008- Feb. 2009 Oct. 2014- till date Reason Increasing non-OPEC oil supplies (Alaska, Mexico, North Sea) Operation “Desert Storm” and EIA emergency stock drawdown Sell off of assets (including commodities) due to the 2008 financial crisis Increasing non-OPEC oil supplies (shale oil from USA) OPEC’s action Raise production Cut production OPEC’s policy Objective Protect market share rather than target price Keep Oil market well supplied Target a price range Post-crash Oil Prices Remained low for almost two decades Returned to prespike levels Reached precrash levels within two years Projected to remain lower

TIME – A VERY SPECIAL BANK ACCOUNT Waiting does not make a mountain smaller.

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CRISIS BREEDS INNOVATION

OIL & GAS: A MAJOR SHARE IN COMMODITY INVESTMENT Source: Bloomberg

OIL PRICE ???? WHO IS TO BLAME

“Ideas Are Nobody’s Monopoly” THINK AHEAD OF OTHERS “Ideas Are Nobody’s Monopoly” Unconventional oil suppliers are likely to continue to be significant players

BOOM-BUST CYCLE

IMPACT OF LOW OIL PRICE Country impact may be offset by: Importers may also Produce Crude Oil Exporters have different fiscal condition Strength of Dollar Role of Subsidies in domestic market Policies Promoting Conservation, Alternatives Stimulates Economic Activity in Net Importing Countries Hampers Economic Activity Net Exporting Countries

IMPACT OF LOW OIL PRICE Russian Growth Cannot Offset Mature Field Decline Latin America at risk Russia crude and condensate production Mexico, Brazil, Colombia production expansion at risk in low price environment Venezuela, Ecuador political regimes at risk in a low price environment Sanctions and low oil prices push back time frame for East Siberia and Arctic development Meanwhile European Demand is Falling and Russian is Pivoting to Asia Middle East: Decades of Instability Iran vs Saudi Arabia Shia vs. Sunni ISIS vs Governing Regimes Civil War in Syria Civil War in Yemen

GOOD FOR INDIA?

IMPACT ON SERVICE SECTOR

GLOBAL CRUDE TRADE FLOWS ARE ADJUSTING

Creative Mind, Positive Thinking Everybody can see Only few can innovate….

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