Oil price rises as UAE quashes hopes of plugging gap in Russian shortfall

Oil prices rose on Thursday amid confusion over whether major producers would help to plug a gap in supplies from Russia.

The United Arab Emirates had appeared to push the members of the OPEC producer group to raise output, only for the UAE's energy minister to quash hopes. The oil price rose more than 5 pert cent, after a 17 per cent fall on Wednesday.

US President Joe Biden and other leaders have pledged to try to ease the price pressures for households. Officials from the US have been in talks with oil producers aimed at boosting supply.

Energy Minister Suhail al-Mazrouei said that the Gulf state remained committed to the existing OPEC monthly output agreement, which fixes how much crude is produced by member countries.

Oil prices have jumped more than 30 per cent since February 24, when Russia launched a military operation in Ukraine, touching $139 a barrel at one point this week.

The oil price had fallen back to about $106 a barrel at one point on Wednesday, but by

Thursday morning it was trading at around $116 per barrel.

How will the soring oil prices impact the Indian economy?

India is heavily dependent on imports to meet its energy requirements. Around 86 per cent of the country's crude oil requirements are met through imports. So clearly, the country's import bills are set to surge. The trade deficit will widen putting pressure on the country's current account balance.

The rise in crude oil prices will stoke inflation and severely hurt economic growth. Due to the ongoing Russia-Ukraine conflict, the prices of other commodities like gas, edible oils, fertilisers, and coal have also surged. This could add another $35 billion to India's import bills. High import bill of crude oil and other commodities is estimated to stoke inflation by at least one percentage point.