Due to the price war between Saudi Arabia and Russia over crude oil, the consumers of this fossil fuel worldwide stand to benefit soon. While it means savings and more purchasing power for every consumer, specifically for Indians, it implies petrol at the price of Rs 50 a litre.
The international price of drinking water is $ 1.5 a litre, which is Rs 111.41 as per today’s exchange rate.
World’s largest oil exporter Saudi Arabia today ‘punished’ Russia, the world’s second-largest producer, for refusing yesterday to reduce production that the Organization of the Petroleum Exporting Countries (OPEC) had proposed.
OPEC and other producers had proposed the cut in order to stabilise falling prices the economic fallout from the coronavirus pandemic had caused.
Saudi Arabia plans to boost crude output above 10 million barrels per day (bpd) in April after the current supply deal between OPEC and Russia — known as OPEC Plus — expires at the end of March, sources said.
As a result, Brent crude futures dropped by $ 14.25 (31.5%) to $ 31.02 a barrel. This is the biggest percentage drop since 17 January 1991 at the beginning of the first Gulf War and the lowest since 12 February 2016. It was trading at $ 35.75 at 6:44 AM in India.
US West Texas Intermediate (WTI) crude fell by $ 11.28, or 27.4%, to $ 30 a barrel. This again is the biggest percentage drop since the first Gulf War in January 1991 and the lowest since 22 February 2016. It was trading at $ 32.61.
The government’s import bill will come down too and the next crude basket is likely to be available to the government at a cheaper price.
Crude oil price crashes 31%
Crude oil prices fell by 31% in the international market today. The reason for this was the price cut by Saudi Arabia. The Saudis, exacting some sort of a ‘revenge’ from Russia, reduced the prices because Russia did not agree to its reduction of production.
This has triggered a price war. India can benefit from this soon.
Petrol costs about Rs 70 across the country as of now. That means a saving of Rs 20 per litre as and when the new price applies to the Indian market.
Crude basket prices
India’s crude basket is currently priced at $ 47.92 per barrel. (One barrel is equal to 42 US gallons or 159 l). That is, India has to spend Rs 3,530.09 for a crude basket at the current price.
If the crude oil becomes 30% cheaper, there is a possibility of the crude basket becoming cheaper by 30% too. That is, the next crude basket can be of around Rs 2,470.
And if the common man gets the full benefit, petrol will be sold at Rs 50 per l. According to the Petroleum Planning and Analysis Cell, the average cost of a crude basket in December 2019 was $ 65.52.
Today’s price of petrol and diesel
In Delhi, the price of petrol decreased by 24 paise to Rs 70.59 per l and diesel by 25 paise to Rs 63.26 per l.
The petrol price in Mumbai was reduced by 24 paise to Rs 76.29 per l and diesel by 26 paise to Rs 66.24 per l.
Note: This calculation is done at an exchange rate of Rs. 73.66.