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Bad news for fuel consumers: Get ready to pay more for petrol, diesel soon
You will have to pay more for fuel in the new year. Opec powerhouses Saudi Arabia and Iraq, which supply nearly 40% of oil India imports from West Asia, on Thursday initiated steps to bring the world’s honeymoon with low oil prices to an end.
Saudi Arabia, the world’s largest oil exporter which two years ago sparked the oil price crash with hefty discounts, raised premium on grades of crude shipped to Asia and the US and initiated talks with buyers to cut supplies by 3-7% in February . Simultaneously, news agency reports said Iraq, the second major Opec exporter and currently among India’s top two oil suppliers, has initiated steps to pare output.Both the developments indicate the November agreement among Opec members and other major oil exporters such as Russia is well on its way to being implemented, proving sceptics wrong.
The target is to cut output by 1.8 million barrels a day, nearly equal to India’s daily import of 1.9 million barrels, with a view to sucking out stockpiles and rebalance market. This is bad news for fuel consumers in a country such as India which imports nearly 80% of its oil needs. Through much of 2015 and 2016, fuel bill shrunk for consumers as oil prices tumbled some 70% from 2014 high of $112 a barrel. Lower oil prices reduced India’s import bill and eased subsidy burden on the government giving it legroom to mop up additional money for social sector spending by raising excise on fuels five times.
But the good times appear to be coming to an end. Already, petrol prices were raised thrice and diesel prices twice in December as the cost of Indian Basket–the mix of crude bought by India–rose 21% from its November level. Any upward movement in global crude, combined with the rupee’s weakness against the greenback, invariably accentuates the impact on pump prices.
International Energy Agency and Opec have projected oil prices to remain in the region of $60 a barrel through 2017 and go higher in 201820. If that is so, the government may be forced to reduce excise duty, which it had hiked to deny consumers the full benefit of low prices, to avoid popular anger as it heads for the general elections in 2019. Until then, keep paying more for fuel. Kyle Singler Womens Jersey
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