Rising oil prices may hurt demand in some of the world’s fastest-growing nations unless producers take steps to boost supplies, according to the International Energy Agency.
In a commentary earlier this week (Why no tax relief on oil imports is Modi’s smart move), we had argued that the government should not, despite bad headlines on oil prices, cut the Centre’s fuel taxes, and ask instead state governments to reduce their ad valorem taxes on petrol and diesel. Just an hour back, Finance Minister Arun Jaitley announced that while the Centre will advice states to cut their ad valorem taxes to the effect of Rs 2.50, it will also be effect a Rs 1.50 cut in Central taxes and ask oil marketing companies (OMCs) to absorb another Rs 1 cut. The cumulative impact, if states follow through, will be Rs 5 cut in retail prices.
Rising oil prices are prompting forecasts of a return to $100 a barrel for the first time since 2014, creating both winners and losers in the world economy.
Oil prices hit their highest since November 2014 on Tuesday, topping four-year highs from the previous day, as looming US sanctions against Iran and reluctance by the Organization of the Petroleum Exporting Countries to raise output supported markets.
India sees no respite from skyrocketing petrol and diesel prices. Petrol price in Mumbai breached Rs 90 per litre mark yesterday. It is close to Rs 83 in Delhi. Yet the Narendra Modi government has not given any indication of a tax cut.
Oil prices dipped on Friday after falling in the previous session as US President Donald Trump urged Opec to lower crude prices ahead of its meeting in Algeria this weekend. International benchmark Brent crude
Petrol and diesel prices have gone up every day since August 16. The prices of petrol and diesel are at an all-time high across the country. In Delhi, petrol sells today, September 17 at Rs 82.06 per litre 15 paise up from yesterday.
The rupee jumped the most in three weeks and stocks rallied after an official said the government may announce measures to support the currency after a planned review of the economy by Prime Minister Narendra Modi this weekend.
Oil prices rose on Wednesday after a report of a decline in US crude inventories and looming sanctions against Iran raised expectations of tightening supply, while top producer Russia warned of a fragile global market.
Oil prices unlikely to soften soon despite rise in US production; geopolitics associated with crude makes it an expensive product
The rise in oil prices has come as a surprise for most policy-makers and analysts, for the obituary of expensive oil was written a long time back. The supply glut and the global fall in oil demand had contributed to a period of low oil prices before 2017.