After 107 days of tensions and conflict, the United States and Iran are set to hold landmark peace talks on Friday in the Swiss resort town of Burgenstock. The discussions will focus on implementing the recently reached agreement and outlining the roadmap for future cooperation.
India would view it as a potential boon to its economy. With close to 85 per cent of total crude oil consumption being imported, it would translate into lower fuel prices, lower logistics’ costs and cheaper input costs for manufacturing with a normalisation of oil and gas shipments through to the oil and gas shipments through the Straits of Hormuz.
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A fall in the price of crude has a knock-on effect on several construction materials derived from petroleum, eg, synthetic yarn, rubber, plastics and petrochemicals. If the trend persisted, it could, in due course, make all sorts of products, for example, textiles, soaps, detergents, cosmetics, pharmaceuticals, tyres and mineral fertilisers, cheaper.
Petrol and Diesel Prices May Ease
The turbulence had interrupted the flow via the Strait of Hormuz, which resulted in an increase in the world crude values. With a probable grace period in shipping corridors, the availability of crude supplies could improve, which would lead to a lowering of the petrol and diesel rates in India.
LPG Supply and Prices Could Improve
India imports the majority of its LPG supplies. Around 88 per cent of the total LPG supply comes through the Strait of Hormuz. Improving the flow of trade is likely to result in easy availability of LPG supplies, stabilisation of LPG prices and reduction in subsidy burden on the government.
Food Prices May See Relief
Lower diesel prices would help bring down transportation and logistics costs and would cost less to ferry fruits and vegetables and other food items across the nation. Imported Gulf fertilisers could also become cheaper and help bring down the cost of farming and food inflation.
Consumer Goods Could Become Cheaper
Many everyday products depend on petroleum-derived raw materials. Falling crude prices could reduce manufacturing costs for:
-Soaps and detergents
-Cosmetics, including cold cream, lotions, lipstick, kajal, etc.
-Shoes and footwear
-Sportswear and readymade garments
-Curtains, carpets and other household items
-Healthcare Products May Cost Less
Materials from crude oil are used in many medical applications. If crude prices stay lower, the price of medicine, syringes, glucose bottles, medical tubing, gloves, masks and other medical supplies may go down.
Agricultural Inputs May Get Cheaper
The prices of insecticides, pesticides and many of the crop-protection preparations, associated with petro-chemical inputs, could also fall, providing some comfort for farmers.
Airfares Could Fall
When crude prices go down, airline turbine fuel (ATF) usually is cheaper too. Airlines may pass this on to consumers by cutting ticket prices.
EMI Relief May Follow
More affordable prices for energy should also contribute towards bringing inflation down. If inflation is kept in check, the Reserve Bank of India may have greater flexibility to keep interest rates down or even further lower them, leading to lower EMIs for homes, cars and business loans.
Tyres and Auto Parts May Become More Affordable
Most rubber used in tyre manufacture is petroleum-derived, so falling crude prices are potentially good news for a lower-cost such as the tyre manufacturer to begin with. The consumer may then start to see some benefit.