India imports nearly 85% of its total Crude oil consumption every year.
India's own production has been below 700,000 barrels per day for a long time.
Why & how does rising Crude Oil hurt India?
A short thread 🧵
India imports nearly 85% of its total Crude oil consumption every year.
India's own production has been below 700,000 barrels per day for a long time.
Iran 17%,
Saudi Arabia 16%,
UAE 14%,
USA 9%,
Qatar 8%,
Others 38%
India import share for Oil from Russia is under 2%, an insignificant number.
Assuming that Oil prices are at $75 (last year),
India's oil import bill is ~ $165bn
India exports refined petroleum products as well. At $75 oil price those exports would amount to $58bn
=Oil trade deficit of $105bn
$100, India's oil trade deficit (imports - exports) would be ~ $140bn
For every $10 rise in Crude Oil from say $100, India's oil trade deficit will rise by ~$15bn
For instance at $120 Oil price it would be ~ $170bn
India's ex-oil Goods trade deficit at current run rate is likely to be ~$100bn,
At $100 Oil add $140bn to trade deficit and it totals to $240bn
$240bn is a large deficit number.
How does Balance of payment (BOP) stack up at this no.? Read on
India is likely to have a surplus of ~$110bn on net services exports,
$80bn in inflows through remittances (NRI's sending money into India)
and India sees outflows of $38bn in primary income.
Goods Trade deficit -240bn
Services surplus +110
Remittances +80
Primary income -38
Total, Current account deficit: -$88bn
How do we cover this on BOP?
India gets, on average, $45bn in FDI inflows;
+can get $10bn in FPI inflows totaling to $55bn
It also raises $25bn through ECBs & other short term loans.
So India's BOP can remain normal when Oil trades between $95 to $100.
What happens when Oil prices spiral?
Almost all the other heads do not move as quickly as oil deficit can. In that scenario it can become a direct headwind for India.
BUT, MOST Important point: Oil has to be at or above $100 for 12 months for this impact in nos
Inflation: For every $10 rise in Oil it adds 90bps to wholesale inflation and about 25bps to consumer inflation in India over a 12 month period
During a market correction, India's financial account can see FPI outflows which adds stress to BOP
-In case Oil prices trade above $100 for a few weeks and revert back below pre-conflict levels of $90, India will have minimal impact
-If Oil stays above $100 or say $120 for even 3 months or more, India's external situation will deteriorate
If there is a de-escalation / ceasefire, the Russian Oil & Gas will slowly come back to market and Oil prices will cool.
Russia O&G is suffering due to self sanctions by companies and it is yet to see full sanction by Govts.
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And by the way, you should never be worried that an offer would be withdrawn if you politely negotiate.
I have seen this happen *extremely* rarely, mostly to women, and anyway is a giant red flag. It suggests you probably didn’t want to work there.
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Always. No, your company is not an exception.
A tactic I don’t appreciate at all because of how unfairly it penalizes low-leverage, junior employees, and those loyal enough not to question it, but that’s negotiation for you after all. Weaponized information asymmetry.
Listen to Aditya
"we don't negotiate salaries" really means "we'd prefer to negotiate massive signing bonuses and equity grants, but we'll negotiate salary if you REALLY insist" https://t.co/80k7nWAMoK
— Aditya Mukerjee, the Otterrific \U0001f3f3\ufe0f\u200d\U0001f308 (@chimeracoder) December 4, 2018
And by the way, you should never be worried that an offer would be withdrawn if you politely negotiate.
I have seen this happen *extremely* rarely, mostly to women, and anyway is a giant red flag. It suggests you probably didn’t want to work there.
You wish there was no negotiating so it would all be more fair? I feel you, but it’s not happening.
Instead, negotiate hard, use your privilege, and then go and share numbers with your underrepresented and underpaid colleagues. […]
