New Delhi: Billionaire Mukesh Ambani, owner of the world’s largest refining complex, today said global oil prices are likely to remain low for 3-5 years, benefitting a net importing nation like India.
“Well, as we see the situation (oil prices), it s low for long. And this is really the first time in the world that oil prices have gone down on incremental supply,” he told CNN’s Fareed Zakaria in an interview.
Ambani, the richest Indian, said there have been spikes in oil prices in past. “But never has it (fallen) because there has been more supply than demand. It’s also the first time that you now have, because of the innovation in the US, large quantities of oil,” he said.
The US, he said, has gone from less than a million barrels a day to nine million barrels a day of oil production.
“And with the oil supply, OPEC has lost the controlling factor. And with that, there is oversupply in the world,” he told Zakaria, the only person to have interviewed Mukesh Ambani twice.
The elder Ambani sibling has a net worth of almost USD 20 billion, while Reliance Industries has a market capitalisation of over USD 40 billion.
Asked how long the scenario will last, he said: “I think for at least three to five years, until we see a structural change, in my view. But I have always been wrong, so,” he said.
Speaking about its consequences, Ambani said the situation is “very favorable” for India, which is one of the largest importers of oil.
“And it helps our foreign exchange bill. And in a certain sense, it helps the fiscal deficit of government because it can mop up incremental revenue. So for oil importing countries, it s very good.
“On an overall economic basis, it s deflationary and all of us understand the dangers of deflation,” he said.
Asked if it meant central banks will have to keep interest rates low for much longer than they thought, he said, “Absolutely”.