Global Oil prices slumps to 17-year low amid coronavirus pandemic

New Delhi : The price for international oil slumped to a 17-year low amid lockdown across the world due to coronavirus pandemic. The demand has fallen drastically as people have been staying inside their homes.

In India, petrol and diesel prices have been frozen since March 16, despite the average crude oil import cost dropping by over a fifth. 

The benchmark Brent crude price on Monday has dropped by as much as 6.62% to $23.28 per barrel. The price of West Texas Intermediate (WTI), another benchmark in oil pricing fell below 5% to around $20 a barrel.

The other major factor for dropped oil prices is an oil price war between Saudi Arabia and Russia. For the government, it means a windfall gain, boosted by one hike in excise duty earlier this month, to be followed by one more that’s in the works.

Government officials and company executives said India not changing its local trading price since March 16 has allowed petroleum refiners to make up for inventory losses. And with increased excise duty, the government has been able to raise additional revenue to fund the battle against Covid-19.

The government raised excise duty on the two fuels by Rs 3 a litre on March 14. A Re 1 per litre increase in excise duty on petrol and diesel would mean an additional Rs 14,500 crore in annual revenue to the government.

According to the latest official data, which comes with a lag, India’s average crude oil purchase price (Indian basket) fell sharply to Rs 1,805.22 per barrel on Friday compared to Rs 2,272.08 per barrel on March 16, when oil refiners had last cut prices of petrol and diesel by 16 paise per litre and 15 paise per litre, respectively.