Question

Falling Oil Prices and their Long-term and Short-term Impact on the Ordinary Investor?

Answer 1

Falling Oil Prices and their Long-term and Short-term Impact on the Ordinary Investor

Falling oil prices could have different effect on different economies . An Oil producing nation will be losing its market in terms of weakning of demand while an importer of oil will be gainer when the oil price continue to decline.

Here in india ,We are one of the largest importers of oil from gulf countries and falling in prices of oil will help as most of the industries here use oil as raw material and hence cutting their overall cost of production.

Investors which are looking for investing in countries which are net importers of oil , will look to allocate more in comsumption economies .While Investors which are looking for investing in econmies which are oil producing nation ,would like to allocate lesser in such economies.

Overall , the fall in oil prices beyond a substantial level shows that there is global demand weakness and slowdown and it will sooner or later spread to other industries as well. It can lead to increase in unemoloymebt as well as lower GDP.