Oil needs a rollback

Neither has there been as much damage as anticipated to Iraq’s oil fields, and most of them can be brought back into production within a short time with sufficient investment and upgradation.

At the same time, with Venezuelan production registering pre-strike output levels of more than two million barrels per day, concerns regarding hitherto tight US oil inventories are now expected to dissipate. Moreover, though the Nigerian political and ethnic unrest—which has seen that country’s oil exports falling by 40 per cent—is still not showing signs of easing, there are some indications that striking workers may resume operations shortly.

In fact, today the international oil market’s concerns seem to be focussed on preventing a crude price crash, thanks to a supply glut, leading to the Organisation of Oil Producing Countries President Abdullah Hamid bin al-Attiyah calling for an emergency meeting of the cartel on April 24 to see if supplies—and hence prices—can be manipulated to preferred levels.

All this should spell good news for Indian consumers who have seen their petrol and diesel bills register a continuous upward trend over the last few months (though political considerations continue to keep kerosene out of the ambit of market dictated prices).

However, despite prices having dropped by almost $10 a barrel since the war began, the petroleum ministry is still waiting to adjust domestic fuel prices, on the ground that it is waiting for the situation in Iraq to stabilise before reversing the auto fuel price hike undertaken recently. With the end of the Administered Price Mechanism regime a year ago, there is no justification for the ministry’s continued policy of the arbitrary pricing of selected petroleum products, particularly if the country has to move towards parity with the international market.