New Delhi: Petrol prices slipped below Rs 71-mark for the first time in eight months Monday as India looks set to reap windfall from a price war among oil producers leading to international crude prices crashing by their biggest margin since the 1991 Gulf war.
International oil prices crashed by close to 31 per cent, the second-largest margin on record, after the disintegration of the OPEC+ alliance triggered an all-out price war between Saudi Arabia and Russia.
Brent futures plummeted to about USD 31 a barrel Monday as Goldman Sachs warned prices could drop to near USD 20.
For India, which imports over 84 per cent of its oil needs, the slump would lead to lower import bill and a cut in retail prices but will harm already stressed upstream firms such as ONGC. Lower oil prices will also help economy from its 11-year low growth rate by way of reducing input cost for a lot of sectors.
In Delhi, petrol prices dropped to Rs 70.59 a litre, the lowest since early July 2019, and diesel rate were cut to Rs 63.26, according to a price notification of state-owned firms.
Fuel prices have been on the decline since February 27 on international trends. Petrol prices have in all fallen by Rs 1.42 a litre since then and diesel rates have dropped by Rs 1.44 per litre.
But the only dampener in the entire scheme of things is rupee which settled 23 paise down at 74.10 against the US dollar. A weaker rupee means India pays more for buying the same amount of commodity from overseas. It will also help lower inflation rate.
According to the oil ministry’s petroleum planning and analysis cell, India is likely to pay USD 105.58 billion or Rs 7.43 lakh crore on import of 225 million tonnes of crude oil in the fiscal year 2019-20, which ends this month. This compares to USD 111.9 billion (Rs 7.83 lakh crore) paid for import of 226.5 million tonnes of oil in 2018-19.
Oil company officials said the import bill will fall in the next fiscal beginning April but an estimation cannot be made given the extreme volatility in the oil and currency market.
It certainly will translate into lower retail prices of petrol and diesel in the coming days as the current rates do not reflect the slump in international prices, they said.
Industry association Assocham said the fall in crude prices will help India recover as low prices of crude can be a demand driver while also taming the inflation.
Agencies