Mumbai, Feb 21 (IANS) Cautioning against the overall deflationary dangers from the global oil price slide, Reliance Industries (RIL) chairman Mukesh Ambani said on Sunday that oil prices are likely to remain low for the next three to five years, benefitting net importing countries like India.
“Well, as we see the situation, its low for long. And this is really the first time in the world that oil prices have gone down on incremental supply,” he told CNN’s Fareed Zakaria in an interview.
“For oil importing countries it is very good. On an overall economic basis, it is deflationary. All of us understand the dangers of deflation,” Ambani said.
“We have had oil price spikes, but never has it been because of more supply than demand. The US has gone from less than a million barrels per day to 9 million barrels a day and OPEC (Organisation of Petroleum Exporting Countries) has lost control of supply,” he added.
On how long the situation would continue, the RIL chairman said: “At least three to five years until we see a structural change, but I’ve always been wrong.”
RIL, which operates the world’s largest refining complex in Gujarat, has a market capitalization of over $40 billion.
Ambani said low oil prices are very favourable for countries like India, one of the world’s largest importers of crude.
“It helps our foreign exchange bill. And in a certain sense, it helps the fiscal deficit of government because it can mop up incremental revenue. So for oil importing countries, it’s very good,” he said.
As per official data available, the Indian basket of crude oil price pulled back a little last week from its earlier plunge, closing trade on Thursday at $31.86 per barrel of 159 litres, which was higher than its previous close of $29.89.