Fuel prices remain steady in India as OPEC+ decides to boost global crude oil production.
On Monday morning, Brent crude was trading at $72.20 per barrel. Meanwhile, the US West Texas Intermediate (WTI) crude reached $68.94 per barrel, showing minimal movement.
Market experts believe that the supply of crude oil is highly likely to increase in the coming days. This enhanced supply will keep downward pressure on global fuel prices.
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, decided to increase oil production. The alliance targetted an additional 1.88 lakh barrels per day starting August.
This follows similar production hikes announced for June and July. The decision is expected to significantly improve the availability of crude oil in the global market.
According to a Reuters survey, OPEC's oil output increased significantly in June. The production rose by 3.3 million barrels per day compared to the previous month, reaching 19.43 million bpd.
Additionally, oil exports from the Gulf region witnessed a substantial recovery. Gulf exports crossed 10 million barrels per day in June, up by over 3 million barrels from May.
However, analysts point out that the full impact of this production hike has not yet materialized. The current production levels are still about 40 percent lower than pre-war levels.
The OPEC+ decision is primarily aimed at addressing the recovering global demand. Since the pandemic, oil-producing nations have continuously adjusted their production strategies to balance the market.
Major producers like Saudi Arabia and Russia are holding regular meetings to regulate supply. Their main objective is to ensure market stability without hurting global economic recovery.
Despite the softening of crude oil prices in international markets, fuel rates in India remain completely unchanged. Major metropolitan cities continue to see stable petrol and diesel prices.
The last major revision in fuel prices across India was implemented on May 25. Since then, state-run oil marketing companies have kept the retail prices strictly unchanged.
In the national capital Delhi, petrol is retailing at Rs 102.12 per liter, while diesel costs Rs 95.20. In Mumbai, petrol is priced at Rs 111.21 and diesel at Rs 97.83.
Kolkata residents are paying Rs 113.51 for petrol and Rs 99.82 for diesel. In Chennai, the price of petrol stands at Rs 107.77 per liter, and diesel is at Rs 99.55.
Furthermore, petrol is priced at Rs 102.97 in Gurugram and Rs 101.96 in Noida. In Chandigarh, petrol is retailing at Rs 101.54, while in Jaipur, it is priced at Rs 113.19 per liter.
Hyderabad continues to record some of the highest rates, with petrol at Rs 115.69 per liter. No revisions have been made in these cities for a prolonged period.
India imports nearly 85 percent of its crude oil requirements to meet domestic demand. Therefore, any fluctuations in global crude prices directly impact the country's economic health.
State-run oil companies like Indian Oil, Bharat Petroleum, and Hindustan Petroleum review prices daily. However, due to various economic factors, retail rates have remained frozen.
If global crude remains below $75 per barrel, oil marketing companies will enjoy healthy margins. A portion of these gains could eventually be passed on to consumers as price cuts.
Market analysts suggest that the OPEC+ move could bring relief to the global economy. An increase in oil supply will play a vital role in controlling inflationary pressures worldwide.
"The decision by OPEC+ to boost production is a step in the right direction to balance global markets, which may eventually bring relief to end consumers."
If crude oil prices continue to trade between $70 and $72, it will ease import bills for India. This could pressure domestic oil companies to reduce retail fuel prices soon.
In conclusion, the OPEC+ decision will enhance crude oil availability in the market. However, Indian consumers might have to wait a bit longer for actual cuts in petrol and diesel rates.
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