For the first time since 1986, the price of crude oil went below zero. This is the largest decline in the price of American benchmark crude West Texas Intermediate (WTI) in history. Due to the Corona virus crisis, the demand for crude oil has come down and all the oil storage facilities have also reached their full capacity. On Monday, the price of crude oil fell below zero to $ 37.63 per barrel.
However, India's dependence is on the supply of Brent crude, not on WTI. Therefore, India will not have much effect on the negative of American crude. Brent prices still remain above $ 20 and this decline was only reflected in WTI's May futures, with June futures still above $ 20 a barrel. US crude oil has recorded a 14.8 percent drop in June delivery, currently priced at $ 21.32 a barrel. That is, even if the price of WTI becomes cheaper in the international market, you will have to pay more for the price of petrol.
India is a major importer of crude oil
India is a major importer of crude oil. India imports 85 per cent of its consumption through imports. So whenever crude is cheap, India benefits from it. Imports do not decrease in case of cheaper oil, but India's balance of trade is less. This helps the rupee because the Indian rupee is strengthened against the dollar, which also controls inflation. Cheap crude oil will reduce its prices in the domestic market as well.
Understand by example
If the price of Brent crude decreases by one dollar, India's import bill is reduced by about 29000 million dollars. That means a reduction of $ 10 will save about 2,90,000 thousand dollars. If the government saves so much, then obviously it affects petrol-diesel and other fuel prices too. That is, petrol and diesel can be cheap.
This affects petrol and diesel so much
A dollar reduction in the price of crude oil directly means a reduction of 50 paise in the price of products like petrol. At the same time, if the price of crude rises by $ 1, then a rise of 50 paise in the price of petrol and diesel is considered certain.
Price is so high in major metros
According to the IOCL website, today the price of one liter petrol in Delhi, Kolkata, Mumbai and Chennai is 69.59, 73.30, 76.31 and 72.28 respectively. Talking about diesel, its prices in Delhi, Kolkata Mumbai and Chennai are 62.29, 65.62, 66.21 and 65.71 respectively.
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