FM Arun Jaitley hopes for stability in global crude oil prices

Finance Minister Arun Jaitley, worried over the impact of crude price volatility on the economy, on Friday hoped that the situation in the Middle East would improve leading to stabilisation of oil prices.

"I am sure the last word on the economy of the oil has not been spoken yet. There are assessments, there are speculations, there are words of wisdom. We are passing through very fluid times and I would always hope that this fluidity settles down and the moderation comes to stay," Jaitley said at 'Urja Sangam' conference in the national capital.

The Finance Minister was commenting on the volatility in the international oil market following air strikes by Saudi Arabia and its allies on rebels in Yemen.

Yemen shares its border with key Middle East oil producers Saudi Arabia and Oman.

Concerns are being expressed that escalation of the crisis could disrupt oil shipments passing through the Bab el-Mandeb Strait, located between Yemen and Djibouti, which sees the passage of as much as 3.8 million barrels of oil every day.

Crude oil prices soared about 5 per cent on Thursday on fears of impact on supplies. However, the Brent crude prices fell 90 cents to close at US $58.29 a barrel in Friday's trade.

Acknowledging that such events were beyond control, Jaitley said, "We become the recipient of circumstances. This is one sector which in the last two months have seen one of the largest movements."

The volatility in crude prices, he said, added to the unpredictability of the economic situation and the other consequence was flow of "disproportionate" amount from consuming economies to producing nations.

In India's case, the minister said, the decline in oil prices in the last few months had encouraged oil companies to pass on the benefit to the consumer.

"The oil companies in India and the Oil Ministry, in the last few months have taken very responsible positions. Huge benefits have been transferred to consumers, this has helped us in containing inflation... Which in turn has reversed the need of the increasing interest rates," Jaitley added.