Crude oil prices in the international market eased on Tuesday after Saudi Aramco said it intends to restart full output next week, recovering from the hit following recent drone attacks. Brent crude oil price fell to $62.6 per barrel by Tuesday’s afternoon, which is almost in-line with the pre-attack levels. A Saudi source confirmed to Reuters that the Abqaiq facility will return to pre-attack production levels by next week. However, earlier reports suggested that repairs could take a long time and some repairs could take as long as eight months. Meanwhile, the fall in international prices of oil is likely to bring relief to India, which largely depends on crude imports.
Another major reason that could further pull down oil prices globally is the possibility of a nuclear deal between the US and Iran. “If the nuclear deal between the US and Iran is closed, the US may lift a few sanctions on Iran, which can boost oil supply and further reduce prices,” Manoj Jain, Director-Commodities, India Nivesh, told Financial Express Online. He added that the price variation in oil prices in Saudi Arabia may not have a severe impact on India as the latter has reduced its oil dependence on Saudi Arabia, while it has increased crude imports from the US.
Meanwhile, Aramco is reportedly reshuffling the types of oil, it will send to Asian customers. It has informed buyers in India and China that it will ship heavy oil rather than light oil. Light crude oil is costlier than heavy crude oil on commodity markets because it produces a higher percentage of gasoline and diesel fuel when converted into products by an oil refinery. On the other side, heavy crude oil is cheaper but it adversely affects the environment since its refinement requires the use of more advanced techniques and the use of contaminants.