NEW DELHI: Global crude oil prices continued declining on Wednesday after Saudi Arabia’s Energy Minister assured that full production at the drone-hit facilities will be restored to normal by the end of this month. The announcement made close to midnight Indian time, saw crude prices falling sharply, bringing relief to major crude oil importers like India.
The moderation in oil prices saw Indian stock markets close in the green and the Indian rupee paring its losses, closing 54 paise up versus the US dollar at 71.24 on Wednesday. Oil marketing company stocks also rose with BPCL rising 3.65 per cent, HPCL 3.64 per cent and IOCL 2.68 per cent on the BSE.
As of 9 pm IST on Wednesday, Brent crude was trading at $64.36 per barrel, down from its Monday close of $69.02 per barrel. The drone attacks on Saudi Arabia’s Aramco-owned crude processing facilities took out a whopping 5.7 million barrel per day (mbpd) of output, nearly 50 per cent of the country’s total production and 5 per cent of the global output.
The aftermath of the attack saw crude oil prices rising more than 20 per cent on Monday, the highest single-day spurt since the Gulf war broke out. Analysts had pointed out that any extended disruption in supply due to the attacks would push crude prices up to as much as $80 per barrel.
However, Saudi Energy Minister Prince Abdulaziz bin Salman assured reporters on Tuesday that production would be back to 11 mbpd by the end of this month and that all repairs will be complete by November end.
“This is good news, since it indicates there will be no major disruption in supplies. OMCs will be able to manage with the stocks they have. But, even that is not likely to be necessary because the Saudis have continued to export shipments to us even after the attacks,” said a senior OMC official.
But, while crude prices have moderated now, analysts say they may remain volatile in the near-term with tensions in the region rising post the attacks.
According to Nomura, every $10 per barrel rise in crude price would cut GDP growth by 0.2 per cent points, widen current account deficit by 0.4 per cent of GDP, widen fiscal deficit by 0.1 per cent of GDP and add around 0.30 per cent to retail inflation.