Crude Oil Price fallen lowest to 20% since the January , Indian Consumers holds Hope

OPEC expressed that its member states’ export accounts for 49 % of the world’s Crude exports and holds 80% of the world’s Oil Reserves .Hence due to its large market size OPEC’s decision has significant impact on Global Oil Prices . OPEC’s member meet regularly decide about the prices of the Oil  

In Maharashtra and Haryana ,  Crude Oil slipped to lowest, increasing the profitability of fuel marketing Companies since January and potentially heading to cut the Pump rates forth the upcoming elections in both the states.

On September 5 , TOI reported that the Brent Crude Oil , obtained from the north sea which serves as a Benchmark for the two-Third of the World’s Traded Oil, has fallen to 73.6 dollar on Wednesday ( 04/09/2024) recording the year’s Low .

The International Crude Oil has seen a narrow downslope which is nearly 20 %  in the last 12 months as a consequence of Demand – Supply imbalance . OPEC groups decided to pause its planned hike in output as the Benchmark Brent Crude oil crashed low due to decelerated demand and accelerated Supply  .

Reason for the Slipping of Rates

Analytics has accredited that the reason for Crude Oil price slip may be of

• Remitment of Libyan Supplies to the market 
• Voluntary Production cuts Unwinded by OPEC+ group from October
• Increased Output outside from the group has led to this Downward Price rates 
• China ,the highest Consumer of Crude Oil is shrinking its consumption since this year due to its economic mess and accelerated electrification   

Significance of Crude Oil Rate slipping 

The rates of Crude Oil being the main inducer of our Indian Economy ,Economic analysts , Government and Public are looking at its sloping keenly and expecting Mr. Modi to grasp these rates and take actions for further reduction in the upcoming weeks .

The Slip in the Oil rates serves as a positive Marketing Lucre for Fuel retailers especially State-run entities which controls 90 % of the Oil Market  

The government has made this framework to cut the petrol and diesel price by Rs.2 per liter by the three state run Oil retailers namely Indian Oil Corporation (IOC) , Bharat Petroleum Corporation Limited ( BPCL) ,Hindustan Petroleum Corporation Limited (HPCL).

The Public Sector Oil Marketing Companies  ( OMC ) has faced major losses due to higher rates of crude Oil and had to reduce the hike before the election polls  

The India’s OMC has two avenues of Profit :

1	REFINING	Earning a gross margin ,calculated by the value of refined products at the refinery gate minus the cost of Crude Oil
2	RETAIL PUMPS	Earning through the commission on fuel sales

Will the Prices steep further

Analysts debate whether the government works for further price reduction  . Even if the current Low prices don’t last , the government would be still Placed well in case of price stabilization around $85 per barrel and concluded finally that the government would adopt Wait and See approach for the upcoming months