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By Nantoo Banerjee India’s continuous hesitancy to curb the retail oil consumption pattern despite a worldwide surge in fuel prices is inexplicable, if not unacceptable. The government, the biggest benefactor of large domestic fuel use by way of imposition of levies close to 50 percent of the retail oil prices, is not prepared to ration […]

The article India Needs To Curb Oil Consumption appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The sharpest pressure has fallen on long-dated Japanese government bonds, where the 30-year yield has climbed above 4 per cent, reaching a record since the maturity was introduced in 1999. The 10-year yield has also risen to around 2.8 per cent, its highest level in nearly three decades, marking a decisive break from the low-yield era that defined Japan’s markets for much of the post-deflation period.

The selloff has rippled across global debt markets. US Treasury yields have moved higher, with the 30-year yield testing levels above 5 per cent, while Germany’s benchmark bonds and UK gilts have also weakened. Bond prices move inversely to yields, meaning the surge in yields reflects heavy selling by investors who are demanding greater compensation for inflation, fiscal risk and uncertain central bank policy.

Rising oil prices are the immediate catalyst. Brent crude has moved above $100 a barrel as geopolitical tensions in the Middle East disrupt energy flows and heighten concerns over import costs for major economies. For Japan, which relies heavily on imported energy, the oil shock carries a particularly direct inflationary threat. A weaker yen has amplified the impact, increasing the local-currency cost of fuel, food and other imported goods.

Japan’s inflation backdrop has become more difficult for policymakers. Consumer prices have remained above the Bank of Japan’s 2 per cent target for an extended period, while corporate goods prices have shown persistent pressure from energy, raw materials and logistics costs. Investors are now pricing in a greater chance that the central bank will raise interest rates again, possibly as early as its next policy meetings, after years of extraordinary accommodation.

Fiscal concerns are adding to the strain. Tokyo is preparing additional spending to cushion households and businesses from rising fuel and utility costs, but fresh borrowing could worsen concerns over debt sustainability. Japan’s public debt is already among the highest in the developed world, making long-term bond investors more sensitive to any increase in issuance. The prospect of larger supply has hit demand for longer maturities, where insurers, pension funds and banks traditionally played a stabilising role.

The Bank of Japan faces a delicate balance. Raising rates too quickly could unsettle growth and worsen losses in bond portfolios held by financial institutions. Moving too slowly could allow inflation expectations to become entrenched and place further pressure on the yen. The central bank has already scaled back its dominance of the bond market compared with the period of yield-curve control, leaving prices more exposed to market forces.

Global investors are also reassessing the role of government bonds as a safe asset. During earlier market shocks, US Treasuries, German Bunds and Japanese government bonds often rallied as investors sought protection. The current episode is different because the shock is inflationary rather than deflationary. Higher energy prices reduce household purchasing power, raise business costs and complicate the task of central banks that had hoped to cut rates or keep policy steady.

The selloff has implications beyond financial markets. Higher sovereign yields raise funding costs for governments already facing pressure from defence spending, ageing populations, energy subsidies and climate-related investment. They also affect mortgage rates, corporate borrowing and equity valuations. Technology shares and other growth-sensitive assets tend to come under pressure when long-term yields climb, because future earnings are discounted more heavily.

Japan’s shift is especially important because its low yields long encouraged domestic investors to buy overseas bonds. As yields rise at home, insurers and pension funds have less incentive to take currency risk abroad, potentially reducing demand for US and European debt. That repatriation effect could intensify volatility in global markets if Japanese institutions continue to rebalance portfolios.

State Administration for Market Regulation said the agenda would focus on removing market barriers, promoting a unified national market, improving law enforcement practices and curbing destructive price wars that have weighed on corporate margins. The measures form part of a broader policy push to reassure entrepreneurs after years of regulatory tightening, weak domestic demand, a property downturn and intense competition across technology, retail and manufacturing.

Private firms remain central to China’s economic model, accounting for more than half of tax revenue, over 60 per cent of economic output, about 70 per cent of technological innovation, more than 80 per cent of urban employment and the bulk of registered enterprises. Beijing’s latest move signals that policymakers see the sector as essential to stabilising growth, sustaining jobs and advancing innovation under the 2026–2030 development blueprint.

The 34-point programme places particular emphasis on equal treatment for private and state-backed enterprises. Regulators are expected to expand checks on local protectionism, discriminatory procurement rules, hidden entry restrictions and administrative practices that prevent companies from competing across provincial borders. The objective is to make China’s internal market function more like a single national marketplace rather than a patchwork of local systems shaped by regional preferences.

Fair competition has become a sharper policy concern as price wars spread across food delivery, electric vehicles, e-commerce and consumer services. Authorities have described extreme discounting and subsidy battles as “involution-style” competition, a term used in China to describe intense rivalry that consumes resources without producing sustainable gains. Regulators are now seeking to distinguish legitimate competition from practices that damage suppliers, workers and smaller rivals.

The plan also strengthens the legal dimension of private sector support. It follows the Private Economy Promotion Law, which came into force in May 2025 and formally placed protections for private business within the legal system. That law sought to address long-standing complaints over unequal access to finance, arbitrary penalties, delayed government payments, inconsistent enforcement and barriers to participation in infrastructure and public procurement.

Beijing is under pressure to show that those commitments can be enforced beyond policy slogans. Private entrepreneurs have frequently complained that local officials apply rules unevenly, with smaller companies facing heavier compliance burdens than larger state-linked groups. The latest regulatory agenda calls for more standardised enforcement, fewer unnecessary inspections and better coordination among agencies, reducing the risk that overlapping regulatory demands disrupt business operations.

The emphasis on efficient regulation also reflects a change in tone after the sweeping crackdowns that reshaped China’s platform economy from 2020 onwards. Internet groups, education providers, fintech companies and delivery platforms faced tighter controls, large fines and abrupt policy shifts, weakening investor sentiment. Although authorities continue to insist that capital must operate within defined boundaries, the current message is more focused on predictability, confidence and growth.

Financial support remains another pillar of the wider policy framework. China has encouraged banks and financial institutions to increase lending to private firms, particularly in advanced manufacturing, artificial intelligence, green technology, biotechnology and other strategic sectors. Large banks have announced multi-year financing pledges for the private economy, while policymakers have called for broader fundraising channels and lower financing costs for smaller enterprises.

The regulatory agenda fits into China’s 2026 economic strategy, which prioritises stable growth, stronger domestic demand, technological self-reliance and risk control. The government has set a growth target range of 4.5 to 5 per cent for 2026, lower than earlier expansion rates but still demanding at a time of weak household confidence, subdued inflation and pressure from external trade frictions.

Private firms are especially important in technology and advanced manufacturing, where China is seeking to reduce reliance on foreign supply chains. Companies such as Huawei, BYD, CATL, Tencent and Alibaba remain closely watched as indicators of the relationship between the state and enterprise sector. Beijing’s message to these firms is twofold: innovation is encouraged, but expansion must align with national priorities and regulatory boundaries.

Foreign investors will watch whether the new priorities translate into measurable changes. China has pledged to widen market access and improve the business environment, but concerns remain over data rules, cross-border flows, procurement access, security reviews and policy transparency. For multinational companies and domestic entrepreneurs alike, the credibility of the 34-point programme will depend on implementation by local authorities as much as central-level messaging.

The market regulator’s plan also gives Beijing a mechanism to address deflationary pressures caused by excessive competition. Food delivery platforms, online retailers and electric vehicle producers have all faced pressure from aggressive pricing campaigns. While consumers may benefit from lower prices, sustained discount battles can weaken profitability, reduce wages across supply chains and discourage investment in quality improvements.

The measure, effective from 16 May for three months, applies to selected motor vehicles including passenger cars, jeeps, vans, buses, goods transport vehicles, ambulances, electric vehicles and hybrids. Vehicles for which letters of credit were opened on or before 15 May are exempt, limiting the immediate disruption for importers who had already committed payments before the order took effect.

The surcharge is levied on the applicable customs import duty, rather than directly on the total value of a vehicle. For many private vehicles, the customs import duty had stood at 30 per cent, meaning the added surcharge raises that component to 45 per cent. Other taxes and levies, including excise duties, value-added tax and sector-specific charges, mean the final tax burden on imported cars can be far higher than the headline customs duty figure.

Deputy Finance Minister Anil Jayantha Fernando said the step was designed to encourage buyers to delay vehicle imports rather than halt the trade outright. He said the government was responding to a sharp rise in import expenditure and added pressure on foreign reserves. “Given the current pressure on foreign exchange, we want people to delay their imports by three months,” he told reporters in Colombo.

The decision marks a swift policy adjustment by President Anura Kumara Dissanayake’s administration as Sri Lanka attempts to balance consumer demand, revenue needs and currency stability after years of severe economic strain. Vehicle imports were heavily restricted after the island’s 2022 financial collapse, when the country ran short of foreign exchange and struggled to pay for fuel, food and medicines. The gradual reopening of imports was seen as a sign of economic normalisation, but it has also revived concerns about the pressure placed on the balance of payments.

Sri Lanka remains dependent on imported fuel, leaving the economy exposed to swings in global crude prices. Tensions across the Middle East have pushed energy costs higher, forcing authorities to reassess import priorities. Fuel prices have already climbed sharply this year, adding to the cost of transport, electricity generation and logistics. The government is trying to prevent higher oil bills from draining reserves at a time when the country remains under a $2.9 billion International Monetary Fund programme.

The rupee has weakened against the US dollar this year, with official figures showing a fall of about 4.5 per cent since January. Central Bank Governor Nandalal Weerasinghe has warned lawmakers that the currency could remain under pressure unless global oil prices ease or the country reduces energy imports. That warning sharpened the policy case for curbing non-essential import demand, particularly in high-value categories such as vehicles.

Vehicle importers and consumers are likely to face a tougher market over the next quarter. The surcharge may delay purchases, reduce showroom availability and raise prices for buyers who choose to proceed. Importers with confirmed letters of credit before the cut-off date may have a temporary advantage, while new buyers could defer orders until the surcharge expires, provided the government does not extend it.

The policy also carries revenue implications. Vehicle imports are a lucrative source of tax income, and Sri Lanka has relied on trade-related levies to support public finances during its recovery. A surcharge may increase tax collected on each imported vehicle, but lower import volumes could offset that gain if buyers hold back. The government’s calculation appears to prioritise currency defence and reserve management over short-term market expansion.

The Korea Composite Stock Price Index touched 8,001.40 in early trade at about 9.15am, extending a rally that has accelerated since early May as investors crowded into semiconductor, memory-chip and data-centre supply chain stocks. The move marked another symbolic milestone for a market that only passed 7,000 seven trading sessions earlier, reflecting the speed with which capital has moved into companies expected to benefit from the AI infrastructure boom.

Traders at Hana Bank’s dealing room in Seoul marked the 8,000-point breakthrough with a ceremony, underscoring the psychological importance of the level for domestic investors. Yet the celebration was tempered by sharp volatility later in the session, as profit-taking and foreign selling hit several of the same technology and auto counters that had led the advance.

Samsung Electronics and SK Hynix remain at the centre of the rally. The two chipmakers have benefited from global demand for high-bandwidth memory, advanced storage and server components used in artificial intelligence training and inference. SK Hynix has strengthened its position in high-bandwidth memory supplied to leading AI chip platforms, while Samsung has drawn renewed investor attention as it pushes to close the gap in next-generation memory products and expand foundry capacity.

The broader appeal of South Korean equities has also been reinforced by expectations that the country’s corporate governance reforms will improve shareholder returns. Measures aimed at narrowing the long-standing valuation discount on local shares, including stronger pressure for dividends, buybacks and more transparent capital allocation, have encouraged investors to look beyond chipmakers into financials, industrials and holding companies.

Market participants said the scale of the advance has created a difficult balance for policymakers and investors. Strong earnings momentum and the AI investment cycle provide support for valuations, but the pace of gains has left the Kospi vulnerable to sudden reversals whenever global technology sentiment weakens. Concerns over crowded positioning, high expectations for AI-related revenue and the concentration of gains in a small group of heavyweight stocks have grown more visible as the index moved through successive records.

The Kospi’s rise has unfolded against a favourable global backdrop. Wall Street’s major indices advanced overnight, led by technology shares, while investor confidence was helped by signs of diplomatic engagement between Washington and Beijing. South Korea’s export-driven economy remains closely tied to global electronics demand, making its equity market highly sensitive to sentiment around chips, cloud computing, smartphones and consumer electronics.

Foreign flows have played a decisive role. Overseas investors have treated Seoul as a liquid way to gain exposure to AI infrastructure without relying solely on US-listed software and chip-design companies. That has lifted trading volumes and strengthened the won at times, although the currency remains exposed to shifts in US interest-rate expectations and geopolitical risks in the Middle East.

Domestic retail investors have also returned to the market in force. The rapid climb has revived comparisons with earlier speculative cycles, but the current rally is more closely tied to corporate earnings upgrades in semiconductors and technology hardware. Brokerages have raised target prices for key chip stocks, citing memory pricing, AI server demand and stronger capital expenditure by global technology companies.

Still, risks are building. A sharp fall after the 8,000-point breach showed how quickly sentiment can turn when valuations look stretched. Heavy foreign selling, particularly in technology and auto shares, pointed to caution after months of gains. Analysts have warned that any slowdown in AI spending, weaker guidance from major US technology firms or delays in high-bandwidth memory certification could trigger further volatility.

The agreement, reached during Modi’s official visit to Abu Dhabi on 15 May 2026, includes a strategic collaboration between Indian Strategic Petroleum Reserves Limited and Abu Dhabi National Oil Company to expand the UAE’s participation in India’s strategic petroleum reserves to 30 million barrels. Both sides will also work on establishing strategic gas reserves, a move that signals a broader shift from emergency crude storage towards a more diversified energy security framework.

The pact places ADNOC at the centre of New Delhi’s stockpiling strategy. The UAE became the first country to partner with India in strategic petroleum storage when ADNOC stored crude in the Mangaluru cavern under an earlier arrangement. The new framework is substantially larger and comes as India seeks to reduce exposure to sudden disruptions in the Strait of Hormuz, sanctions-driven shifts in trade flows, shipping risks, and sharp swings in spot fuel prices.

India, the world’s third-largest oil consumer, imports more than 85 per cent of its crude requirement and nearly half of its natural gas needs. Its existing strategic petroleum reserve system has underground rock caverns at Visakhapatnam, Mangaluru and Padur, with a combined capacity of about 5.33 million tonnes, equivalent to roughly 39 million barrels. These reserves are separate from commercial inventories held by refiners and oil marketing companies.

The current reserve base covers only a limited number of consumption days, making expansion a long-standing policy priority. Phase-two plans have included additional capacity at Padur and a new facility at Chandikhol in Odisha, while officials have explored public-private partnership models to bring in foreign oil producers and trading firms. The UAE arrangement is likely to support that model by tying storage capacity to assured supply and commercial flexibility.

The energy package also includes a long-term LPG supply arrangement between Indian Oil Limited and ADNOC. The UAE is already the largest source of LPG for India, meeting about 40 per cent of its import requirement. A deeper supply contract is significant for household energy security, as LPG remains a politically sensitive fuel linked to cooking gas access, subsidy management and inflation expectations.

Gas cooperation is another important element. New Delhi has been trying to raise the share of natural gas in its energy mix, but price volatility and limited storage have slowed progress. Strategic gas reserves could help shield fertiliser plants, city gas distributors, power producers and industrial users from abrupt supply constraints. The concept remains more complex than crude storage because gas requires specialised infrastructure, including LNG terminals, underground storage or converted reservoirs, but the agreement shows that both governments see gas security as part of the next phase of their partnership.

The Abu Dhabi talks also build on a wider hydrocarbons relationship. The UAE was among India’s top crude suppliers last year and has become a central partner in LNG, LPG, upstream investment and petroleum product trade. State-backed companies from India hold stakes in Abu Dhabi oil assets, including the Lower Zakum concession and Onshore Block 1, marking a rare upstream footprint for New Delhi in the Gulf.

The timing gives the agreement strategic weight. West Asian tensions have renewed concern over maritime chokepoints and insurance costs for energy cargoes. Any prolonged disruption near the Gulf would affect Asia’s largest consuming economies first, particularly import-dependent buyers such as India, Japan, South Korea and China. Larger stockpiles do not remove that vulnerability, but they give policymakers more room to manage price spikes, refinery supply schedules and emergency releases.

For the UAE, the pact strengthens its role as a long-term energy partner beyond crude sales. ADNOC has been widening its international storage, trading, LNG and downstream footprint as Abu Dhabi positions itself as both a reliable supplier and a capital partner. Participation in overseas strategic reserves gives the company access to storage optionality while reinforcing diplomatic ties with major demand centres.

The Modi-Sheikh Mohamed meeting also covered defence, investment, infrastructure and regional security, underscoring the shift in bilateral ties from labour, remittances and trade towards a broader strategic partnership. The UAE hosts a large expatriate community from India and remains one of New Delhi’s most important Gulf economic partners, with strong links in logistics, ports, food security, renewable energy and financial services.