Crude oil prices have fallen 20 per cent since March 2024 to below $75 a barrel. This is likely to reduce the prices of petrol and diesel in India. Since April, crude oil has fallen by a massive 19 per cent globally. It is now at $72.48. Due to Corona, prices have risen sharply since March 2020 when prices fell to a two-decade low of $19.9. In March 2022, prices crossed $100 for the first time since 2014 and reached a decade high of $116 a barrel in June 2022.
Reasons for the decline
In fact, crude oil prices have fallen globally due to reduced demand from China, the world’s largest oil importer. OPEC had lowered its global oil demand forecast for the current year from 2.11 million barrels per day to 2.03 million barrels per day.
Effects on the economy
This will reduce the operating costs of over 58 lakh diesel freight vehicles, six crore cars and 27 crore two-wheelers, which largely run on petrol. Cheaper diesel reduces transport and logistics costs, which in turn reduces inflation, as most goods are transported by road. In fact, a part of the savings of car and two-wheeler users is spent in other sectors of the economy.
Petrol and diesel prices in India were deregulated in 2010 and 2014 respectively. Oil marketing companies revised prices fortnightly until 2017, since then prices should be revised daily but this has not happened.
What is the probability of reduction
The Petroleum Secretary has said that if the global crude oil price remains low for a long time, then the oil companies will consider reducing the retail prices. Usually, the price reduction is due to low crude oil prices and any upcoming elections. Assembly elections are to be held in Haryana and Jammu and Kashmir in the next 20 days. Then elections are to be held in Maharashtra and Jharkhand at the end of the year.
