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High Oil Prices Are Back To Spoil The Fun For Indian Consumers And Economy
People waiting to fill fuel in Bhopal (Mujeeb Faruqui/Hindustan Times via Getty Images)
Global crude oil prices (Brent Crude Oil) scaled new heights on Monday (6 November) and hit their highest levels of $64.23 per barrel since July 2015. Even though crude prices cooled off slightly on Tuesday, they remained high at $64.22 a barrel.
According to Reuters, price of Brent futures—the pricing benchmark that India counts for its oil imports —- touched a high of $62.90 per barrel, their highest level since July 2015, over 40 per cent above June's 2017 lows.
This surge in all possibility will trigger a hike in the domestic price of petrol and diesel.
High oil prices have a cascading effect on all sectors thereby triggering inflation. Besides, as India imports 80 per cent of its oil requirements, high oil prices will have a direct bearing on India’s oil import bill and a higher current account deficit.
The upsurge in global oil prices is a fall out of the political developments in Saudi Arabia where the crown prince cemented his power over the weekend through an anti-corruption crackdown that included high-profile arrests including royals, ministers and investors, including billionaire Alwaleed bin Talal and the powerful head of the National Guard, Prince Miteb bin Abdullah.
Saudi Arabia is the world's biggest exporter of crude oil.
Experts are of the view that crude prices above $60 per barrel can pose a challenge for the Indian economy.
Following a Rs 2 per litre cut in excise duties by the government and a 50 paise cut announced by Oil companies, petrol prices fell from Rs 70 a litre to Rs 68 a litre in the first week of October.
However, with the ongoing upsurge in international oil prices, oil companies donot rule out the possibility of a fuel price hike.
It remains to be seen whether the government will resort to another cut in excise duties or will the oil companies hike the price of fuel.
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