There were several reasons for the sharp fall in crude prices during the week. For starters, the Trump tariffs have put undue pressure on global business. The expectation is that there would be a gradual slowdown in GDP growth and that would also depress the demand for oil. That is, of course, the ostensible reason for the sharp fall in crude prices. The real reason is that, apart from the demand factor, even supply has become more concentrated in the non-OPEC group. Hence, OPEC is slowly losing its influence over the crude price setting. 

In the period starting 2014, the real swing factor for oil shifted from OPEC to the US economy. Subsequently, it was the US that started influencing global oil prices, till Russia became a part of OPEC plus. However, with the Ukraine war, the influence of OPEC Plus also started to wane as sanctions became a pressure tactic. What has changed in the recent months is that key non-OPEC producers like the US, Canada, Brazil, and China are playing a key role in influencing supply and the price of oil. Today, it is non-OPEC that is the real swing factor in oil prices. 

The broad expectation is that the glut in the market could arise as a result of the demand and supply factors. The overall demand for crude is likely to go down in tandem with a slowdown in GDP growth. That is a phenomenon we have seen with most economic slowdowns and if the tariff war causes a slowdown, then oil prices can be the first casualty. Also, the supply of oil is likely to expand in a big way. The US, China, Canada, and Brazil want to have their last big hurrah before green pressures take a hold. While the US inventories of crude have been rising sharply, it is expected that eventually, even the EU and the OPEC would join the oil supply expansion brigade. After all, when you cannot influence supply and price, the best is to participate in growth. 

Few things enthuse the Indian economy as lower crude oil prices. Last week, the price of crude fell by 10% and touched a 4-year low. Today, crude is the single biggest item of imports by India and so, lower crude prices would automatically push the Indian import bill lower and cut down the trade deficit. The last time India made big gains on oil was in the 2014 to 2016 period. If the world enters such a phase, India would gain in a big way; in terms of lower trade deficit, lower imported inflation, and a lower current account deficit. These will reflect in the prices of oil in India, and import bills!