On Friday, oil prices dropped to a six-week low as additional Covid lockdowns raised demand issues just as industry participants signalled a supply restoration. Due to these reasons, domestic fuel merchants may drop gasoline and diesel rates following the rise of covid-19 cases in Europe, according to two inside sources.
This Friday, standard Brent crude fell 6.95 percent to $78.89 a barrel, the lowest since October 1, from $84.78 ten days ago.
However, for consumers seeking a break at the pump, the decreases are unlikely to materialise into cheaper gas prices right away. According to AAA, the national average for a gallon of gas hit a seven-year high of $3.41 on Friday. This compares to $3.34 a month ago and $2.12 a year ago.
Since 4 November, when the government slashed central taxes on petrol and diesel by 5 to 10 cents per litre, retail prices of automotive fuels in India, which are related to daily changes of international benchmarks, have been flat. Petrol has remained consistent at 103.97 per litre in Delhi for 18 days, while diesel has remained steady at 86.67 per litre.
Experts say that because state-run oil marketing corporations are required to revise retail gasoline and diesel prices daily, they should pass on the benefit of lower global oil costs to consumers.
S.C. Sharma, a retired officer on duty at the Planning Commission, said, “Since oil prices have fallen and are likely to fall in future, India’s oil marketing companies are also required to pass on the benefit of reduced oil prices on a day-to-day basis to give relief to consumers and to facilitate high economic growth,”
Retail motor fuel costs in India have risen at an unprecedented rate. The Organization of Petroleum Exporting Countries’ supply limits were one cause for the high local fuel costs.
Crude had been trading in the green previously in the day, but it dropped into the red after news of Austria’s lockdowns. The demand comeback has been a significant engine of oil’s rally this year, and any signs that it may be thawing will frighten market participants. Because individuals are unable to move and businesses are shuttered, lockdowns reduce demand for petroleum products. If the policies are extended beyond Austria to other regions of Europe or even beyond, the industry may become oversupplied.
Concerning political headwinds, oil is under pressure from increased supply as producers, especially those in the United States, ramping up output.
Throughout 2021, oil prices have steadily risen, with WTI hitting a seven-year high of $85.41 on Oct. 25. It has dropped 11.5 percent since then. Despite the current weakness, oil prices in the United States are still up 55 percent for 2021.