Crude oil prices tanked over 30 per cent in Monday’s trade after Saudi Arabia slashed prices and set plans for a big increase in crude production in April. WTI crude oil traded 30.96 per cent, down at $28.50 per barrel in the international market. Brent crude oil was down 28.61 per cent at $32.32 per barrel.
Below are key things you need to know about falling crude oil price and its impact on the Indian economy.
Why did crude oil slip today?
Crude prices declined after the Saudi move to start a price war after Russia balked at making further steep output cuts proposed by OPEC to stabilise oil markets hit by worries over the global spread of the coronavirus. Saudi Arabia plans to boost its crude output above 10 million barrels per day (bpd) in April after the current deal to curb production expires at the end of March, sources told Reuters. The world’s biggest oil exporter is attempting to punish Russia, the world’s second-largest producer, for not supporting the production cuts proposed last week by the Organisation of the Petroleum Exporting Countries (OPEC).
Which sectors in India may benefit with falling crude oil price?
Oil marketing companies (OMCs), tyre industry, synthetic fibre producers and businesses, which use oil derivatives as core inputs like paints, producers of lubricants, transformer oils, plastic products, soaps and detergents, etc are likely to gain with the falling crude oil prices. Shares of oil marketing companies including Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) and Indian Oil CorporationNSE 2.63 % (IOC) advanced up to 9 per cent in Monday’s morning trade.
What does the crude price outlook look like as of now?
Motilal Oswal Financial ServicesNSE -3.04 % believes that crude oil is likely to stabilise around Rs 2,200 per barrel and the trend is likely to remain negative. The commodity traded at Rs 2,591 per barrel in morning trade.
