RESUMO
Oil accounts for a large percentage of the world’s energy consumption, ranging from a low of 32% for Europe and Asia, up to a high of 53% for the Middle East. This paper focuses on the state of the global oil industry and its implications on the Indian economy. The paper begins with the description of the current global oil market in terms of the major producers and consumers of oil. The supply is described in terms of crude oil supply which is dependent on the availability of oil reserves and the supply of petroleum products for which the refining capacity is also a contributing factor. On the demand side the paper focuses on the key sectors in terms of end use of oil and has looked at the current and projected future values of demand for oil in these sectors. The paper further looks at how imports are used to cover the trade gap and what are the major sources of these imports. Finally, the paper proceeds to look at the likely effect of future demand supply gap on the future balance of trade and the various monetary policy measures to be taken to mitigate the effect on India’s economy. Key Words: Oil demand, cartelization, oil supply, oil reserves, Indian economy.