A recent forecast made by my colleague, Prof. J. D. Agarwal, indicated that oil prices were expected to shoot up, hence economies and international agencies needed to initiate effective steps to offset the shocks. Suggestions to this effect were also considered in his paper, which appeared in Finance India, March 2004. This piece was written in December 2003, when no market indication of such a scenario was visible.
Also our suggestion to create an Oil Pool Account in 1990-91, which was duly initiated by India and some other countries, has helped India live with the shock which the world has seen in the last two years.
Fortunately, the development of derivative markets and products on oil and their use by markets globally have also helped to bring discipline to the oil market and a reduction of pure dependence on OPEC or a select few nations.
Professor of Finance & Director,
Indian Institute of Finance
©OECD Observer No 250, July 2005