With the World’s largest producer of crude Saudi Arabia having dictated terms in the OPEC meeting held in Vienna on November 27 by not reducing its output - a move which led to the global oil prices falling to a four year low of $72.76 a barrel - the development will come as a boon for developing economies like India as consumer price inflation will be tamed and the overall fiscal conditions will improve since petrol and diesel prices are expected to soften.
According to industry sources, retail prices of petrol and diesel are likely to witness a cut of up to Rs 1 a litre, when the oil marketing companies (OMCs) will revise the prices on November 30. The cut, sources pointed out, is going to be a nominal one compared to the considerable fall in global crude prices mainly due to the election code of conduct in place due to the ongoing assembly polls in Jharkhand and J&K.
However later reviews may see a considerable downward revision in petrol prices, they added as the fall in crude prices is expected to continue for some more time in the near future.
“This correction in crude prices (falling to $72 a barrel), seems more structural than cyclical and lower prices are expected to continue for some time,” said Debashish Mishra, Senior Director, Deloitte Touche Tohmatsu.
Former Chairman of the country’s largest retailer Indian Oil Corporation (IOC) R S Butola told The Pioneer that market price of petrol and diesel may not fall “immediately”.
He however added that if the Government creates a sort of a stabilisation fund, where some of the benefits which it will accrue in the long run from falling crude prices, can be parked, then the common man may benefit considerably.
Mishra on his part observed that the global downward trend is “good news” for the common man as well as the Centre.
“This is indeed, good news for both Government as well as consumers. lower petrol and diesel prices will help tame consumer price inflation and overall fiscal health of the country,” he added.
Meanwhile, looking at global opinions and comments which are emanating from the outcome of the OPEC meeting, a kind of conspiracy theory that has emerged, point at Saudi Arabia’s supposed long term plan of making US’ shale sales irrelevant by allowing the crude prices to fall further downwards.
The irony though, according to experts, is that even Saudi Arabia does not know what level of fall in global crude prices will be suitable for achieving this aim. A source privy to all the developments told this newspaper that while the prices reaching $60 a barrel could do the trick, oil fields in the US are even ready to see them touch $40 a barrel levels.
Coming back to the OPEC meeting, the cartel’s Secretary General Abdullah Al-Badry told media persons after the meeting in Vienna on November 27 that all members were on board with the decision to stick to the present output level i.e. 30 million barrels a day.