With global brent crude oil prices having fallen significantly over the last six weeks from $86.29 to $63.3 per barrel, Indian petrol and diesel prices have seen some correction while the rupee has strengthened against the dollar.
Between October 3 and November 21, while brent crude prices decreased by 36.31% to $63.3 per barrel, the prices of petrol and diesel in Delhi decreased by 8.9% and 5.28%, respectively. Petrol, which was selling at Rs 83.85 per litre on October 3, was at Rs 76.30 on November 21. The price of diesel, Rs 75.25 on October 3, was down to Rs 71.27 on November 21.
During the same period, the rupee became stronger against the dollar by 2.64%. One dollar was equivalent to Rs 71.30 on November 21.
Various factors led to the decline in crude prices. These include:
* Saudi Arabia and other major oil producers, which have been holding back production of oil since 2017, started to produce oil in ample amounts in order to ease consumer worries and placate United States President Donald Trump, according to a report in The New York Times.
* At the same time, production in the United States has been rising faster than expected. “Output has also risen in Libya, despite continuing warfare, and it has held up better than expected in another troubled country, Venezuela. Volumes of oil held in storage tanks around the world are beginning to build again, raising fears of a renewed glut, analysts say,” the New York Times report added.
* Trump’s sanctions on Iran have not had a huge impact on the latter’s oil production. This may be because Trump has permitted Iran’s largest customers — Japan, China and India — to continue buying oil temporarily. “The market was quite surprised to see that waivers were granted,” The New York Times quoted Homayoun Falakshahi, an Iran analyst at Wood Mackenzie, an energy research firm, as saying.