Saudi oil attack: Crude oil prices may not remain higher for long; here’s why

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Published: September 17, 2019 1:45:15 PM

The spike in global crude oil prices may push up India’s purchase costs, but the rates are not expected to remain higher for an extended period, a report said.

Saudi Arabia, attack on saudi Arabia, Oil, crude Oil, oil prices, Gulf crisis, 1991 Gulf crisisThe price of oil rose the most on record on Monday with Brent crude surging by nearly 20 per cent, the biggest percentage gain since June 1998.

The spike in global crude oil prices may push up India’s purchase costs, but the rates are not expected to remain higher for an extended period, a report said. A surge in US production is likely to cap the fuel prices from rising further, CARE Ratings said. “Even the sentiment hovering around the US-China trade war and reduction in demand forecasts could aid in easing the prices,” it added. However, the rates are expected to remain between $70-75/bbl in  the forthcoming months till normalcy gets back to Saudi production after drone attack on Saudi crude oil infrastructure , the report noted.

The price of oil rose the most on record on Monday with Brent crude surging by nearly 20 per cent, the biggest percentage gain since June 1998. After India cut its imports from Iran, rising dependence on  Saudi Arabia for crude supply may be a cause for concern for it, experts say.

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Meanwhile, some other experts say that the retail prices of fuel may surge by Rs 5-6 per litre, as the recent spike in global crude oil prices will likely push India’s crude oil purchase costs higher. The surge in global crude prices driven by drone strikes on Saudi Aramco’s oil refinery in Saudi Arabia will likely hit India’s oil marketing companies. “… a USD 10 per bbl rise in global crude and product prices may require OMCs to increase the retail price of diesel and gasoline (petrol) by Rs 5-6/liter in the following fortnight,” Kotak Institutional Equities said in a research note. Kotak note said, adding: “Sharp jump in global crude prices may also put pressure on refining margins amid lower demand, besides increasing the absolute quantum of fuel and loss.”

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