NEW DELHI: Voluntary production cuts of over one million barrels per day (bpd) by leading OPEC Producers dashed hopes of an early reduction in pump prices and rekindled fears of further inflationary pressures amid recession concerns in the West.
In Sunday’s surprise announcement, benchmark Brent crude jumped 6% to trade at $84.8 a barrel after hitting $86.44 on Monday, the sharpest rise in nearly a year.
The voluntary cuts amount to 3.6 million bpd, or 3.7% of daily global supply, as the group had already announced cuts of 2 million bpd by December. Russia Supported voluntary cuts by increasing the planned reduction in production.
international energy agency Last month, it said that global oil demand could increase by 2.2 million barrels from the current level to 103 million barrels per day. Clearly, the latest production cut will keep prices higher, with most analysts suggesting $80-90 a barrel and some brokerages favoring even $100.
OPEC linchpin Saudi Arab described the move as a measure to ensure stability in the oil market. Market watchers saw a bigger drama in geopolitics and the recent strain in relations between Washington and Riyadh over Pres. Joe Biden his insistence on higher volumes from OPEC to further lower prices and his administration’s public reiteration that the US was in no rush to fill the Strategic Petroleum Reserve.
As a country that meets 85% of its oil needs through imports, India is vulnerable to any volatility in oil prices.
So the cut could not have come at a worse time for fuel consumers in India. The recent fall in oil prices had made petrol and diesel profitable for retailers, who were earlier incurring losses due to the freeze on pump prices amid higher crude oil prices.
In a sign of better margins, private sector retailers such as Reliance Industries Limited It has recently reduced its prices to bring it at par with state-run companies. This triggered talk that fuel prices are about to come down as private retailers charge more than state retailers to make up for under-recovery. But with oil nearing $85 a barrel, a price cut does not seem possible.
For the Centre, the rise in oil will add to inflationary pressures on the economy. Prashant Vashisht K execution Said higher oil prices push up the import bill and weaken the rupee against the dollar, affecting the current account deficit. They also increase the LPG subsidy bill and manufacturing cost. On the upside, oil producers would benefit from higher profits and cash accumulations, leading to higher windfall tax income for the Centre.
In Sunday’s surprise announcement, benchmark Brent crude jumped 6% to trade at $84.8 a barrel after hitting $86.44 on Monday, the sharpest rise in nearly a year.
The voluntary cuts amount to 3.6 million bpd, or 3.7% of daily global supply, as the group had already announced cuts of 2 million bpd by December. Russia Supported voluntary cuts by increasing the planned reduction in production.
international energy agency Last month, it said that global oil demand could increase by 2.2 million barrels from the current level to 103 million barrels per day. Clearly, the latest production cut will keep prices higher, with most analysts suggesting $80-90 a barrel and some brokerages favoring even $100.
OPEC linchpin Saudi Arab described the move as a measure to ensure stability in the oil market. Market watchers saw a bigger drama in geopolitics and the recent strain in relations between Washington and Riyadh over Pres. Joe Biden his insistence on higher volumes from OPEC to further lower prices and his administration’s public reiteration that the US was in no rush to fill the Strategic Petroleum Reserve.
As a country that meets 85% of its oil needs through imports, India is vulnerable to any volatility in oil prices.
So the cut could not have come at a worse time for fuel consumers in India. The recent fall in oil prices had made petrol and diesel profitable for retailers, who were earlier incurring losses due to the freeze on pump prices amid higher crude oil prices.
In a sign of better margins, private sector retailers such as Reliance Industries Limited It has recently reduced its prices to bring it at par with state-run companies. This triggered talk that fuel prices are about to come down as private retailers charge more than state retailers to make up for under-recovery. But with oil nearing $85 a barrel, a price cut does not seem possible.
For the Centre, the rise in oil will add to inflationary pressures on the economy. Prashant Vashisht K execution Said higher oil prices push up the import bill and weaken the rupee against the dollar, affecting the current account deficit. They also increase the LPG subsidy bill and manufacturing cost. On the upside, oil producers would benefit from higher profits and cash accumulations, leading to higher windfall tax income for the Centre.