Relevance : GS Paper III
Why has this issue been raised?
Recently, USAdecided not to extend the 180-day waiver to India to purchase oil from Iran.
The price of Brent crude
- The US announcement caused the price of Brent crude oil to witness a sudden jump.
- The price of Brent crude has been rising steadily in the last few months.
Challenges faced by India
- India will have to find alternative oil suppliers.
- Higher oil prices will negatively impact current account deficit, fiscal deficit and inflation.
- Higher oil prices also encourage OPEC torestrict oil supply.
Way forward for India
- India needs to diversify its supplier base.
- It needs to increase domestic sources of energy supplies.
- Opening up the renewable energy sector for more investments.