A cut in retail prices of petrol and diesel possible if Brent prices sustain at such low levels
The global oil market has been experiencing a significant drop in prices over the past few months, with Brent crude oil prices reaching their lowest levels in over a decade. This has been a welcome relief for consumers, as the cost of petrol and diesel has also seen a decline. However, the big question on everyone’s mind is whether this trend will continue and if we can expect a further reduction in retail prices of petrol and diesel.
The answer to this question lies in the sustainability of Brent prices at such low levels. Brent crude oil, which is the international benchmark for oil prices, has been trading at around $30 per barrel, a sharp decline from its peak of over $100 per barrel in 2014. This drop in prices can be attributed to various factors such as oversupply, weak global demand, and the ongoing trade war between the United States and China.
The sustained low levels of Brent prices have had a direct impact on the retail prices of petrol and diesel. In India, for example, the retail price of petrol has dropped by almost 20% since October 2018, while diesel prices have seen a reduction of over 15%. This has brought much-needed relief to the common man, who has been burdened by high fuel prices for a long time.
But can we expect a further reduction in retail prices of petrol and diesel? The answer is yes, but with a caveat. The retail prices of petrol and diesel are directly linked to the international crude oil prices, and any significant change in these prices will have a ripple effect on the retail prices. Therefore, a sustained low level of Brent prices is crucial for any further reduction in retail prices of petrol and diesel.
The good news is that the current trend in the global oil market suggests that Brent prices are likely to remain at low levels for some time. The oversupply of oil in the market, mainly due to the increase in production by major oil-producing countries such as the United States, Russia, and Saudi Arabia, is expected to continue. This, coupled with the weak global demand for oil, is likely to keep Brent prices in check.
Moreover, the ongoing trade war between the United States and China has also played a significant role in keeping oil prices low. The trade tensions between the two countries have resulted in a slowdown in the global economy, which has led to a decrease in demand for oil. As long as this trade war continues, we can expect Brent prices to remain at low levels.
So, what does this mean for the common man? It means that there is a high possibility of a further reduction in retail prices of petrol and diesel if Brent prices sustain at such low levels. This will not only bring relief to the consumers but also have a positive impact on the overall economy. Lower fuel prices will result in a decrease in transportation costs, which will, in turn, reduce the cost of goods and services. This will provide a much-needed boost to the economy, which has been struggling with slow growth for some time now.
The government has also been proactive in passing on the benefits of low oil prices to the consumers. In the past, when oil prices were high, the government had imposed heavy taxes on petrol and diesel to increase its revenue. However, with the drop in oil prices, the government has reduced the taxes, resulting in a decrease in retail prices. This shows the government’s commitment to providing relief to the common man and boosting the economy.
In conclusion, a cut in retail prices of petrol and diesel is possible if Brent prices sustain at such low levels. The current trend in the global oil market suggests that this is highly likely, which is good news for the consumers and the economy. The government’s efforts to pass on the benefits of low oil prices to the consumers are commendable and will go a long way in providing relief to the common man. Let us hope that the trend continues, and we see a further reduction in retail prices of petrol and diesel in the coming months.
