Comprehension For SBI PO Set – 45


The long answer is more complex. The economic slowdown in the US, Europe and Asia along with dollar depreciation and commodity speculation have all had some role in the downward descent in the international price of oil. In recent years, the supply of oil has been rising but not enough to catch up with the rising demand, resulting in an almost vertical escalation in its price. The number of crude oil futures and options contracts have also increased manifold, which has led to significant speculation in the oil market. In comparison, the role of the Organization of Petroleum Exporting Countries (OPEC) in fixing crude price has considerably weakened. OPEC in often accused of operating as a cartel restricting output, thus keeping prices artificially high. It did succeed in setting the price of crude during the 1970s and the first half of the ‘80s. But, with increased futures trading and contracts, the control of crude pricing has moved from OPEC to banks and markets that deal with futures trading and contracts. It is true that most oil exporting regions of the world have remained politically unstable, fuelling speculation over the price of crude. But there is little evidence that the geopolitical uncertainties in west Asia have improved to weaken the price of oil. Threatened by the downward slide of oil price, OPEC has, in fact, announced its decision to curtail output.


1. Why are oil-importing countries relieved?

(a) Price of crude reached $147, not $200, as was predicted.
(b) Discovery of oil reserves within their own territories

(c) Demand for crude has fallen sharply.

(d) There is no need for them to invest huge amounts of money in alternative sources of energy.

(e) None of these


(A) OPEC has not been able to restrict the oil output and control prices.

(B) The supply of oil has been rising to match demand.

(C) Existence of large number of oil futures and oil contracts

(a) Only A

(b) Both A and B

(c) Only C

(d) All A, B and C

(e) None of these


(a) When the price rises the demand for crude oil falls immediately.

(b) A small change in demand will result in a sharp change in the price of crude.

(c) Within a short span of time the price of crude oil has fluctuated sharply.

(d) Speculation in oil does not have much of an impact on its price.

(e) None of these

4. Which of the following is/are TRUE in the context of the passage?

(A) The decline in oil prices has benefited all countries.

(B) Renewable energy sources are costlier than non-renewable ones.

(C) Lack of availability of alternative renewable energy resulted in rise in demand for crude.

(a) Only B

(b) Both A and B

(c) Both B and C

(d) Only C

(e) None of these

5. What has the impact of the drop in oil prices been?

(a) Exploration for natural gas resources has risen.

(b) The dollar has fallen sharply.

(c) OPEC has decided to restrict its production of oil.

(d) Economic depression in oil-importing countries

(e) Drastic fall in demand for crude oil

6. What led to alternative energy sources being considered economically feasible?

(a) The price of oil rose by 70 per cent while renewable energy sources are cheap.

(b) Exorbitant crude oil prices made alternative energy sources an attractive option.

(c) Expert predictions that the price of oil would alternatively escalate and plunge sharply

(d) Evidence that no new sources of oil and gas are available

(e) None of these

7. What does the author want to convey by citing the statistics of 2005-07

(a) The prices of crude were rising gradually so people were not alarmed.

(b) The dollar was a strong currency during that period.

(c) Many people turned to alternative renewable energy sources because of high oil prices.

(d) If the price of oil is high for a short time it does not necessarily result in a drop in consumption.

(e) People did not control their demand for fuel then, which created the current economic slowdown.


(a) Economic crisis in America, European and Asian nations

(b) Speculation in oil markets

(c) Weakening of the dollar

(d) Political stability in oil-exporting countries

(e) All the above are not responsible for the current drop in oil prices

9. Which of the following is NOT TURE in the context of the passage?

(A) Open was established in 1970 to protect the interests of oil importing countries.

(B) When demand for oil exceeds supply there is a sharp rise in price.

(C) Today futures trading markets set the oil prices to a large extent.

(a) Only A

(b) Only C

(c) Both A and C

(d) Only B

(e) None of these

10. Which of the following is the function of OPEC?

(a) Controlling speculation in oil.

(b) Ensuring profits are equally distributed among all its members

(c) Monitoring inflation in oil prices and taking necessary steps to lower it.

(d) Guaranteeing political instability in oil-exporting countries does not impact output

(e) Determining prices of crude oil

Directions (Q. 11-13): Choose the word which is most similar in meaning to the word printed in bold as used in the passage.


(a) Modify

(b) Construct

(c) Initiate

(d) Fix

(e) Instil


(a) Incentive

(b) Supplying

(c) Stimulating

(d) Irritating

(e) Rescoring

13. DENT

(a) Reduction

(b) Break

(c) Tear

(d) Breach

(e) Split

Directions (Q. 14-15): Choose the word which is most opposite in meaning of the word printed in bold as used in the passage.


(a) Compatibly

(b) Similarly

(c) Likely

(d) Aligning

(e) Resembling


(a) Powerful

(b) Nourish

(c) Intense

(d) Boost

(e) Energise

Answer Key:

1. (e) 2. (c) 3. (e) 4. (a) 5. (c) 6. (b) 7. (d) 8. (d) 9. (a) 10. (e) 11. (e) 12. (c) 13. (a) 14. (b) 15. (d)