As OPEC and its allies decide to hike crude oil production in between the range of 600,000-1 million barrels a day, some relief on petrol and diesel prices front may be expected in India. The crude oil prices may be range bound between $70-$75 per barrel in the coming months from the highs of $78-$80, which may improve the import bill as India imports 80-85 percent of its consumption requirements, CARE Ratings said. Earlier, a decision was taken by OPEC to reduce crude oil output by 1.8 million barrels a day.
“India will get some relief as prices of oil will be lower than the highs of $78-$80, which will improve our import bill as India imports 80%-85% of its consumption requirements. This will have a positive effect on market sentiment affecting our exchange rate and reduce the headline inflation. The OPEC decision would also get factored by the MPC when it meets next for taking a call on interest rates,” the rating agency said.
The price of natural gas will come down as prices of crude oil ease, CARE Ratings said. The prices of natural gas and crude oil move in tandem. This is a positive for fertilizer, power, and petrochemical companies which use natural gas as a feedstock, it added.
It is also expected that prices of petrol and diesel in India may follow a downward revision as their prices also move in tandem with those of crude oil. OPEC agreed on Friday on a modest increase in oil production from July after its leader Saudi Arabia persuaded arch-rival Iran to cooperate amid calls from major consumers to help reduce the price of crude and avoid a supply shortage.
The group has agreed that OPEC and its allies led by Russia should increase production by about 1 million barrels per day (bpd), or 1 percent of global supply.