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It’s not just Demand and Supply, there’s more to the story of Crude Oil prices, examine the factors that affect the oil prices across the world.

Topic:  Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment. Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

6. It’s not just Demand and Supply, there’s more to the story of Crude Oil prices, examine the factors that affect the oil prices across the world.(250 words)

Reference: Hindustan Times 

Why this question:

The question is based on fall in Oil prices and what opportunities do the sudden crash in crude oil prices offers for India, How the country should make the most of a second oil windfall.

Key demand of the question:

Explain the fall in oil prices, and examine the factors that contribute to the fall apart from mere demand supply equation.

Directive:

Examine – When asked to ‘Examine’, we must look into the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.

Structure of the answer:

Introduction:

Briefly talks about the impact of recent oil prices crash in general and its causes.

Body:

Explain that It’s not just Demand and Supply, there’s more to the story of Crude Oil prices. Four major factors help determine the price of oil: Supply & consumption, government policies, Geopolitics and financial markets. Elaborate on the above factors with suitable examples. Discuss what opportunities the current situation holds for India.

Conclusion:

Conclude with what should be India’s role amidst the oil shocks across the world and how should it benefit from it.