Latest news with #PushpinSingh
France 24
3 days ago
- Business
- France 24
Oil under $65 a boon for consumers, but a burden on producers
That is good news for consumers but not so much for producers, analysts say. A barrel of Brent North Sea crude, the international benchmark, stands below $65, a far cry from the more than the $120 reached in 2022 following the invasion of Ukraine by major oil producer Russia. Lower inflation The fall in oil prices has contributed to a global slowdown for inflation, while also boosting growth in countries reliant on importing crude, such as much of Europe. The US consumer price index, for example, was down 11.8 percent year-on-year in April. Cheaper crude "increases the level of disposable income" consumers have to be spending on "discretionary items" such as leisure and tourism, said Pushpin Singh, an economist at British research group Cebr. The price of Brent has fallen by more than $10 compared with a year ago, reducing the cost of various fuel types derived directly from oil. This is helping to push down transportation and manufacturing costs that may, in the medium term, help further cut prices of consumer goods, Singh told AFP. But he noted that while the drop in crude prices is partly a consequence of Trump's trade policies, the net effect on inflation remains difficult to predict amid threatened surges to other input costs, such as metals. At the same time, "cheaper oil can make renewable energy sources less competitive, potentially slowing investment in green technologies", Singh added. Oil producers As prices retreat however the undisputed losers are oil-producing countries, "especially high-cost producers who at current and lower prices are forced to scale back production in the coming months", said Ole Hansen, head of commodity strategy at Saxo Bank. Oil trading close to or below $60 "will obviously not be great for shale producers" either, said Rystad Energy analyst Jorge Leon. "Having lower oil prices is going to be the detriment to their development," he told AFP. Some companies extracting oil and natural gas from shale rock have already announced reduced investment in the Permian Basin, located between Texas and New Mexico. For the OPEC+ oil alliance, led by Saudi Arabia and Russia, tolerance for low prices varies greatly. Saudi Arabia, the United Arab Emirates and Kuwait have monetary reserves allowing them to easily borrow to finance diversified economic projects, Leon said. Hansen forecast that "the long-term winners are likely to be major OPEC+ producers, especially in the Middle East, as they reclaim market shares that were lost since 2022 when they embarked on voluntary production cuts". The 22-nation group began a series of cuts in 2022 to prop up crude prices, but Saudi Arabia, Russia and six other members surprised markets recently by sharply raising output. On Saturday, the countries announced a huge increase in crude production for July with an additional 411,000 barrels a day. Analysts say the hikes have likely been aimed at punishing OPEC members that have failed to meet their quotas, but it also follows pressure from Trump to lower prices. That is directly impacting the likes of Iran and Venezuela, whose economies depend heavily on oil revenues. A lower-price environment also hurts Nigeria, which like other OPEC+ members possesses a more limited ability to borrow funds, according to experts. Bit non-OPEC member Guyana, whose GDP growth has surged in recent years thanks to the discovery of oil, risks seeing its economy slow.
Yahoo
3 days ago
- Business
- Yahoo
Oil under $65 a boon for consumers, but a burden on producers
US President Donald Trump's tariffs, his call to "drill baby drill" and especially a decision by OPEC+ to hike crude output quotas have oil prices trading at lows not seen since the Covid pandemic. That is good news for consumers but not so much for producers, analysts say. A barrel of Brent North Sea crude, the international benchmark, stands below $65, a far cry from the more than the $120 reached in 2022 following the invasion of Ukraine by major oil producer Russia. - Lower inflation - The fall in oil prices has contributed to a global slowdown for inflation, while also boosting growth in countries reliant on importing crude, such as much of Europe. The US consumer price index, for example, was down 11.8 percent year-on-year in April. Cheaper crude "increases the level of disposable income" consumers have to be spending on "discretionary items" such as leisure and tourism, said Pushpin Singh, an economist at British research group Cebr. The price of Brent has fallen by more than $10 compared with a year ago, reducing the cost of various fuel types derived directly from oil. This is helping to push down transportation and manufacturing costs that may, in the medium term, help further cut prices of consumer goods, Singh told AFP. But he noted that while the drop in crude prices is partly a consequence of Trump's trade policies, the net effect on inflation remains difficult to predict amid threatened surges to other input costs, such as metals. At the same time, "cheaper oil can make renewable energy sources less competitive, potentially slowing investment in green technologies", Singh added. - Oil producers - As prices retreat however the undisputed losers are oil-producing countries, "especially high-cost producers who at current and lower prices are forced to scale back production in the coming months", said Ole Hansen, head of commodity strategy at Saxo Bank. Oil trading close to or below $60 "will obviously not be great for shale producers" either, said Rystad Energy analyst Jorge Leon. "Having lower oil prices is going to be the detriment to their development," he told AFP. Some companies extracting oil and natural gas from shale rock have already announced reduced investment in the Permian Basin, located between Texas and New Mexico. For the OPEC+ oil alliance, led by Saudi Arabia and Russia, tolerance for low prices varies greatly. Saudi Arabia, the United Arab Emirates and Kuwait have monetary reserves allowing them to easily borrow to finance diversified economic projects, Leon said. Hansen forecast that "the long-term winners are likely to be major OPEC+ producers, especially in the Middle East, as they reclaim market shares that were lost since 2022 when they embarked on voluntary production cuts". The 22-nation group began a series of cuts in 2022 to prop up crude prices, but Saudi Arabia, Russia and six other members surprised markets recently by sharply raising output. On Saturday, the countries announced a huge increase in crude production for July with an additional 411,000 barrels a day. Analysts say the hikes have likely been aimed at punishing OPEC members that have failed to meet their quotas, but it also follows pressure from Trump to lower prices. That is directly impacting the likes of Iran and Venezuela, whose economies depend heavily on oil revenues. A lower-price environment also hurts Nigeria, which like other OPEC+ members possesses a more limited ability to borrow funds, according to experts. Bit non-OPEC member Guyana, whose GDP growth has surged in recent years thanks to the discovery of oil, risks seeing its economy slow. pml-bcp/jkb/aks/js Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
08-05-2025
- Business
- Yahoo
How India won the economic war against Pakistan
What should have been a day of celebrations after securing Britain's biggest trade deal since Brexit with India was quickly overshadowed. Hours after London and New Delhi announced the historic agreement, it became clear that the world's fastest-growing large economy had struck its neighbour, Pakistan, killing dozens. The military strikes have brought the two nuclear-armed countries to the brink of war, extending a long-standing dispute over the Himalayan region of Kashmir. The escalating tension comes after a remarkable divergence in economic fortunes for the two neighbours, which experts say has played a role in inflaming tensions. At the start of the century, living standards in Pakistan were slightly higher than in India. But over the last three decades India has experienced a growth miracle that could one day make it the world's largest economy. Living standards in India are today a third higher than in Pakistan, after jumping ahead at the end of the 2000s. Meanwhile, Pakistan is a melting pot of crises. The divergence has only added to the simmering tensions between the two rivals. 'We used to talk about India and Pakistan in the same breath,' says Tim Willasey-Wilsey, a professor at King's College London who served for 27 years with the Foreign and Commonwealth Office, including in Pakistan. 'When I was there in the 1990s, they had about the same GNP per capita [output per head]. Now, they're just vastly different. India is an emerging power. Pakistan is struggling. I think this is part of the problem. I don't think Pakistan have fully woken up to the new reality.' India's economic might is demonstrated by the fact Western nations such as Britain are queuing up to sign trade deals, ignoring inconvenient facts like the country's burgeoning trade with Russia. It is clear why Labour would be willing to turn a blind eye: children born today are likely to live to see India become the world's biggest economy. It is a rising economic power, links to which could prove hugely lucrative. 'Based on figures from the end of last year, India is to overtake the US in 2087 and China in 2097,' says Pushpin Singh, a senior economist at the Centre for Economics and Business Research. 'This assumes that China will overtake the US at some point as well. So by the end of the century, they will be the world's biggest economy.' India's growing middle class is already proving an engine of economic growth, as many Western countries have outsourced roles in sectors like IT to the country. What is behind its rise? 'They deregulated the economy in 1990 and have never looked back,' says Willasey-Wilsey. 'They're developing more and more. As more international companies move out of China and choose India instead, the prospects really look quite good.' As well as deregulating, India also invested heavily in infrastructure: road, rail and renewable energy. 'A lot of massive infrastructure projects have happened, especially under the Modi government. With a huge population, you also have a huge middle class, and infrastructure especially being concentrated initially in the urban areas, you're seeing a lot of migration from rural to urban areas,' Singh says. Infrastructure has also become a symbol of the rising tension between the two countries. India has pushed forward the start date of four hydro-power projects in the Kashmir region, sparking fears it will lead to less water downstream. Water levels in Pakistan's Chenab River have already fallen by 60pc, threatening its agriculture. India has also suspended a 65-year-old water-sharing treaty between the two countries. India's success stands in stark contrast to its debt-bloated, struggling neighbour. 'You would expect Pakistan to be performing the same way as India, given the geographical proximity, similar kind of cultures, and obviously they were once within the same kind of country, to say it very crudely,' Singh says. Modern-day India and Pakistan were born out of the partition of British India in 1947. For several decades, Pakistan was the more successful economy. But political instability, profligate borrowing and less favourable demographics mean it is today among the world's poorest countries. 'There is a huge reliance on external debt in Pakistan, which is very much a function of the governance. It hampers quite a bit of economic progress,' says Singh. As a result, two thirds of Pakistan's day-to-day spending goes to servicing its debts. The country is in the midst of a $7bn (£5.2bn) bailout deal struck with the International Monetary Fund (IMF) just last year. Can Islamabad afford war? Pakistan would have far more to lose in that scenario given its weaker economy, Willasey-Wilsey warns. However, Pakistan's prime minister has so far vowed to take revenge for 'every drop of blood' spilled as result of the strikes on the country. While Pakistan is far smaller, it is heavily militarised. The two countries have been locked in dispute over the Kashmir region, effectively since partition. Both administer parts of it and conflicts have flared up over the years. India's 'precision strikes' on nine 'terrorist camps' this week were in retaliation for the killing of 26 people in its part of Kashmir two weeks earlier. New Delhi claimed Pakistan had supported the terrorists behind the attack. The threat of full-blown war between the two countries is worrying, given they are both nuclear powers. 'It could get very bad,' says Willasey-Wilsey. 'If Pakistan responds, then what does India do next? So it all depends on that.' The escalation is happening at a time when the US is showing little interest in ensuring global peace. However, Pakistan's high debt levels mean other countries could force it to step away from an escalation, he says. 'India is very rich, Pakistan is very indebted. What we what really needs to happen is Saudi Arabia, UAE and Pakistan's creditors really need to turn the screw on Pakistan and say, right, this is just not going to happen.' Simmering religious tensions and national resentments have bought the two nuclear powers to the brink of war. The best hope of averting a devastating crisis may be economic. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
