History has shown us that mankind is ready to wage war for access to natural resources. Oil is a significant natural resource over which major wars have been fought. It remains a hot topic of discussion in the West. In its pursuit of oil, the West has played a significant role in destablising the Middle East. Only a decade ago, a barrel of oil was one of the costliest want. The prices of oil were so high that one remained apprehensive of moving towards the purchase of the very commodity. In 2006, China set the oil market on fire. A barrel of oil cost a hundred US dollars. Oil, then went on to make headlines with rises in price to hundred and forty-two dollars in 2008. As most oil merchants and investors looked at this as a lucrative opportunity for business, they failed to gauge the potential trap. The oil market soon followed up with a crash as prices dipped to thirty-two dollars, ruining many. 2016 is the year which many predict as the year when the oil market collapses. The predicted drop from a meagre thirty dollars to ten dollars per barrel presents a vision of doomsday for some.
Many might be under the impression that this is a blessing for India. Almost one-third of our import budget is spent on oil. However, what one fails to comprehend is that it is a problem which is more global than local in nature. The severe drop in the prices of oil is an indication of the global economy hitting an all-time low which leads to the possibility of a recession.
Though, in India, the citizens are hardly affected, the crashing of the oil markets has led to over a million Indians losing their jobs and livelihood in different parts of the Gulf nations. The drop in prices is not great news for Indians further because of the possible drop in currency values. One may argue that if oil is cheaper and there is lesser money to pay in order to purchase imported oil. If that is indeed the case, then why a drop in the Rupee’s value? It is because of the powerful US Dollar.
Recalling 2012 when the oil prices had dropped, India had to sell rupees to purchase dollars to purchase oil. However, if things are to continue, then the world is heading towards a severe economic crisis.