Crude oil prices fall to 18 year low
The price of crude oil is now cheaper than water. The havoc of Corona is that there is a lockdown in most countries of the world. Due to this, the demand for petrol and diesel has decreased, on the other hand, due to the price war between Saudi Arabia and Russia, crude oil has weakened further. The situation is that the price of one liter of crude oil has reached even below the price of one liter of bottled water. According to the current rate, one barrel of crude oil is available for about 1500 rupees. There are 159 liters in a barrel and in such a situation, the price of one liter of crude oil is less than Rs 9.43 per liter, whereas in India, a bottle of water is available for Rs 20 to Rs 25.
According to the news agency AFP, after the oil prices reached an 18-year low in Asian markets on Tuesday, there was a sharp improvement in prices. Traders said investors relied on the policymakers’ move amid growing fears over the Coronavirus epidemic. US standard West Texas Intermediate jumped 7.3 percent to $ 21.5 per barrel, while international standard Brent crude was up 3.3 percent at $ 23.5 a barrel.
On Monday in New York, prices had reached their lowest level since 2002 and the West Texas Intermediate briefly fell below $ 20 a barrel. Governments are under lockdown to prevent the outbreak of the Corona virus worldwide, which has led to a drop in oil prices. Crude oil has weakened further due to the price war between Saudi Arabia and Russia. Meanwhile, news came that oil prices were discussed on Monday between US President Donald Trump and his Russian counterpart Vladimir Putin. In such a situation, it is believed that there can be an agreement between Russia and Saudi Arabia on production.
On the one hand, due to the fall in crude oil prices, India has to spend less foreign exchange. On the other hand, instead of reducing the price of petrol and diesel after the fall in the price of crude oil, it is filling the exchequer by increasing excise duty. The government gets a profit of 13 thousand crores when excise duty increases by one rupee.
Why are petrol and diesel not getting cheap even after the fall?
Now a question is arising in the minds of people that what effect will this price war on oil have on India. India is the third largest oil consuming country in the world and imports 85% of its needs. Obviously any fall in the price of oil will reduce its import bill, but will Indian consumers benefit from it? The answer is- there may be a slight benefit, but do not expect big cuts in the price of petrol and diesel. Central and state governments will use this opportunity to raise additional revenue by increasing excise duty and VAT.
Another reason why petrol-diesel consumers are not benefited from the fall in crude oil prices. Actually, a dollar reduction in the price of crude oil reduces India’s import bill by Rs 2,936 crore. Similarly, a change of one rupee per dollar against the dollar makes a difference of Rs 2,729 crore on India’s import bill. Officials of oil companies say that the country’s import bill may have a difference in the beginning of next financial year in April, but they cannot make any correct guess about it due to uncertainty in the oil and money markets.
