The rising Covid-19 infections – and deaths – in both
India and Japan have dampened the positive sentiment that we saw at the
beginning of the week in crude oil markets.
The fall in crude oil price for the third successive
day clearly reflects the anxieties felt by the investors over the state of
affairs in the world’s third and fourth largest users of the commodity in the
face of the latest challenge.
In India, the latest data as well as the ground
realities paint a grim picture: the supply of oxygen has been a critical issue
that is vital to saving lives; migrant workers from relatively poor states are
on the move back to their villages in large numbers, which creates its own
logistical challenge; crematoriums are full and in some parts of the country
funeral pyres are lit in the open.
Having anticipated the catastrophic impact on the
economy that just showed some improvement, the states are reluctant to go into
full lockdown; they know all too well how difficult it is to revive – once again,
having been in the same situation last year; India experienced the worst
economic slowdown in 70 years due to the pandemic last year.
Due to local travel restrictions, people choose to
stay indoors and the public transport has been downgraded to essential skeleton
services.
The demand of petrol and diesel has clearly gone
down and so has the import of crude oil.
Indian government, having launched a fairly
successful vaccination rollout, did not anticipate the resurgence of the
infection on this scale; judging by what happened last year in the world’s
second most populous nation, it will take months before normalcy returns.
Up until then, the Indian economy will slide into an
inevitable, relatively passive phase with far reaching consequences for those
who rely on the lucrative Indian markets – for months to come.
