New Delhi, Nov 28: Global oil prices have come down to four-year lows of around $70 a barrel on Thursday after OPEC, a group of major oil supplying countries, decided against cutting back production. This is expected to further decrease prices of petrol and diesel in India.
According to reports, as India imports nearly two-thirds of its crude oil requirement, the steep fall in global crude prices will cut companies’ import bills, thereby, enabling them to reduce retail prices of petrol and diesel.
Petrol prices could fall below Rs. 60 a litre in the coming weeks, if the slide in global crude prices continues to follow the current pattern, said domestic oil industry sources.
Lower fuel costs is likely to help the government’s efforts to keep inflation low and stable.
India’s retail inflation fell to a three-year low of 5.52% in October while the wholesale inflation rate plunged to a five-year low of 1.77%, aided by a sharp drop in vegetable and petrol prices.
Lower inflation, in turn, could prompt the Reserve Bank to cut interest rates and nudge banks to lower home loan EMIs.
Chairman of a leading oil company seeking anonymity told a news agency: “If the slide in oil prices continues, we can expect petrol prices to drop below Rs. 60 a litre from around Rs. 65 presently (in Delhi).”
It may be noted that the OPEC, a cartel of 12 oil producing nations that controls 40% of the world’s oil output, in a five-hour meeting in Vienna decided not to reduce production, despite a 30% fall in oil prices since June.
Since August, petrol has turned cheaper by Rs. 9.36 a litre in six price cuts, while diesel prices have been cut by Rs. 5.62 a litre since October.
Petrol now cost Rs. 64.25 a litre in Delhi and Rs. 71.91 in Mumbai. Diesel, India’s most consumed fuel, costs Rs. 53.35 a litre in Delhi and Rs. 61.04 in Mumbai. Prices vary between states due to local levies.
India, which is the world’s fourth-largest oil consumer, imports around 190 million tonnes of crude oil a year at $145 billion, thus, it spends more than a third of its total import bill.
With every dollar decrease in oil prices, the government’s oil import bill is likely to come down by Rs. 4,000 crore.
(With Agency Inputs)