1 October 2019: After Saudi Aramco assured the world that the oil production facility has been completely restored, the surge in the Brent crude oil price completely reversed and the price fell even below the pre-attack levels on Monday.
1 October 2019: Petrol and diesel will likely get cheaper in the next two weeks, with prices falling as much as Rs 1.5 per litre from the current levels, following a sharp drop in the global crude oil prices, which now trades at the levels seen before the Saudi Aramco drone attacks. Petrol and diesel prices in India have consistently risen since the Saudi Aramco crude oil facility was attacked on 14 September 2019. Following the attack, international crude oil prices shot up, in turn leading to a rise in India’s domestic retail fuel prices as well.
However, after Saudi Aramco assured the world that the oil production facility has been completely restored, the surge in the Brent crude oil price completely reversed and the price fell even below the pre-attack levels on Monday. A day before the attack, the Brent crude oil price was around $60 per barrel on 13 September, which had shot up to $69.6 per barrel by 16 September. Brent crude oil price has since again dropped to $59.4 per barrel as on 30 September.
“Retail price of petrol and diesel primarily depends on crude oil prices and the dollar exchange rate. The current fall in the Brent crude oil price is likely to bring the petrol price down by around Rs 1.5 in another 15-18 days,” Ajay Bansal, President, All India Petroleum Dealers Association, told Financial Express Online. Petrol price in India rose from Rs 71.75 per litre before the pre-attack level to Rs 74.67 per litre on 1 October.
International oil prices also play an important role in maintaining India’s current account as crude oil is India’s largest import. Expensive oil import can shoot up India’s import bill, raising the country’s current account deficit. Hence, the fall in prices comes as a sigh of relief for India.
Saudi Aramco’s Chief Executive Officer Ibrahim al-Buainain said that Saudi Aramco has restored full output capacity to the level before the attacks and when asked if the output was at 9.9 million barrels a day, al-Buainain said that it was restored to its target level or even a little higher, according to Reuters.
The attacks on the Saudi facilities, reportedly, hit more than 5 million barrels a day of Saudi crude production offline, which disrupted 5 per cent of the world’s oil production. Immediately before the attacks, the oil prices in the international market were floored amid a global weak demand. However, the contraction in oil supply and fear of a long term oil crisis shot up the oil prices in the international market, but the complete restoration of the Saudi Aramco facility has once again brought the traders’ eyeballs on the weak economic growth globally.
- Published on Tuesday, 1 October 2019, on www.financialexpress.com