Oil prices slumped further on Friday with Brent crude sliding under $67 a barrel?the lowest level for more than 15 months?as slowing energy demand took its toll. The crude oil that India imports also touched $61 a barrel in the Friday?s trade in the international oil market. This price of Indian basket of crude oil assumes significance as the government has set $61 a barrel as the level for considering a cut in domestic fuel prices. The price of Indian basket of crude oil was $62.86 in the Thursday?s trade.
Does it then indicate that the consumers should gear up for a fuel price cut? Petroleum ministry officials, however, said crude oil prices have to stabilise at these levels as the average of crude oil prices for the month of October is still close to $70 a barrel. ?There is still some way to go before we can think of a price cut,? a senior petroleum ministry official said.
The price of Indian basket stood at $129 a barrel in June when the price for domestic fuels increased. While petrol became dearer by Rs 5 a litre, diesel was costlier by Rs 3 a litre and LPG by Rs 50 per cylinder. After hiking the domestic fuel prices on June 5, the petroleum ministry had said this change in fuel prices correspond to crude oil price of $67 a barrel. After the price of Indian basket of crude oil came down to $67 a barrel levels, the petroleum ministry said the impact of rupee depreciation against the dollar has brought this level down. Therefore, after the price of crude oil that India imports has touched $61 a barrel, all eyes are set on whether the government will change the domestic fuel prices or not.
Although the present financial state of the three OMCs does not warrant a cut in the domestic fuel prices, ?A price reduction may be considered if crude oil falls to $61 per barrel,? Deora has been saying till now. Hence, it is to be seen how the government deals with the falling prices of crude oil in the international oil market. Deora had on Thursday told the reporters that prices haven?t fallen so much to warrant a rate cut. ?I welcome fall in oil prices. We are watching the situation very carefully and hope there is further reduction so that we can think (of a price reduction),? he had said.
Oil marketing companies-IOC, BPCL and HPCL?are currently losing about Rs 280 crore per day on sale of petrol, diesel, domestic LPG and kerosene as government has not allowed them to align retail prices with cost of production. They are losing Rs 2.85 a litre on petrol, Rs 7.26 on diesel, Rs 29.19 on kerosene and Rs 335.03 per LPG cylinder and are projected to lose Rs 1,47,592 crore in revenues this fiscal.
Worried about slumping oil prices, the producer cartel Opec said it was bringing forward an extraordinary meeting on the impact of the current finance crisis on oil rates on October 24 instead of November. Announcing the special meeting last week, the cartel said it was ?concerned about the deteriorating economic conditions.? Several Opec members have been called for the meeting to cut output to shore up prices. Opec?s current output quota is 28.8 million barrels a day.
