NEW DELHI: High volume oil consumers like India seem to be heading for some relief, with crude oil prices falling sharply on Thursday as major oil exporters indicated that a consensus on increasing crude oil production was near.
Brent crude, which forms a substantial portion of India’s crude oil basket, fell to as low as $72.94 per barrel on the spot markets from an opening to level of $74.46.
The correction in prices have been a continuing trend since May 23, when prices breached the $80 mark after the announcement of new US sanctions on Iran and ongoing supply disruptions in Libya and Venezuela. The result however, has been a series of indications from major oil producers like Saudi Arabia and Russia that an increase in production would be forthcoming in the run-up to the OPEC meeting in Vienna on Friday.
On Thursday, observers received stronger indications that a consensus on production hikes might be near.
Reuters reported Saudi Arabian Energy Minister Khalid al-Falih telling reporters in Vienna that the oil market had now rebalanced and his aim was to prevent a shortage of crude in future that could squeeze the market. Ministers at the event have also indicated that Iran, which was expected to oppose an increase might now agree to a production hike.
Any decision to increase production during Friday’s meeting is expected to see crude oil prices fall further.
For India, which has been demanding for ‘reasonable and responsible pricing’, a decline would give much needed relief since prices are now directly tied to international benchmarks. While fuel rates have been falling over the last few days, current oil prices are still a far cry from the $45 per barrel a year ago.
Domestic crude oil production falls by 2.95%
NEW DELHI: India’s crude oil production declined around three per cent in May 2018 to 3007.84 thousand metric tonnes compared to May 2017 output.
The decline comes at a time when fuel consumption, a proxy for oil demand touched to record high in the same month to 18.72 million tonnes with oil prices also going upward direction. Oil production by state-run ONGC stood at 1840.93 TMT during the month, which is 4.82 per cent lower when compared to May 2017 production.
“Shortfall in production is largely attributable to closure of wells to facilitate activities the under the Life Extension of Well Platform project,” the Petroleum Ministry said in a statement.