NEW DELHI: Just over a month after prices shot to a four-year high, brent crude rates fell below the $70 mark on Friday for the first time since April this year. The fall comes on the back of rising production, and an expected decline in global demand due to the ongoing tariff tussle between China and the United States.
Brent crude hit a seven-month low of $69.13 per barrel during the day, a fall of 19.88 per cent since October 3.
Declining prices have come as a huge relief to Indian fuel consumers, grappling with high retail prices over the past few months. In fact, Indian oil marketing companies cut petrol and diesel prices again on Friday by 21 paise and 18 paise per litre respectively, making it 24 days since fuel prices were last raised.
Surging production has erased gains in price made on fears that US sanctions on Iran would result in significant supply shortfalls. Waivers granted by the US this week to eight major Iran oil importers, including India, have also eased these concerns.
The decline in oil prices also softens the risk of fuel-driven inflation for India, according to an SBI Research report. “We believe that the decline in oil price might continue. Even our analysis of global growth vis-a-vis oil prices suggest that since 2012, oil prices in the first half are always greater than or equal to the second half of a year. With the IMF revising its global growth projections downwards, there is every reason to be optimistic,” the report noted.
Prices have fallen so sharply, in fact, that reports now speculate that the upcoming meeting of the Organization of the Petroleum Exporting Countries (OPEC), the oil producers’ cartel, this weekend could see members of the oil cartel discuss production cuts to shore up prices.