There will be no major cut in the prices of petrol and diesel in the country due to ‘burning’ of the Crude oil market due to Corona virus epidemic. This is because the domestic fuel prices in India are set by a different ‘benchmark’ and the refineries already have sufficient reserves of crude oil and are not yet purchasing American crude.
Amid the turmoil in the US market, the price of crude oil fell so much that the oil buyers were not ready to take it and the seller is currently asking them to keep it in their stores. They may also have to pay for it. With the production of crude oil and its availability exceeding the requirement, due to dwindling demand due to corona virus, traders are looking to remove their unwanted stock as soon as possible. This ‘collapsed’ American West Texas Intermediate crude oil prices for May delivery.
Businesses unable to take delivery of book order
Indian Oil Corporation (IOC) chairman Sanjeev Singh said that traders are not able to take delivery of pre-booked orders as there is no demand. Because of this, crude oil prices have come down in America. They are paying him in reverse to keep the oil in his reserves on behalf of the seller. Singh said, “If you look at the June futures, it is trading at a positive trend of around $ 20 per barrel.” He said that the lower prices of crude oil are good in the short term, but in the long run it will affect the oil-based economies, because the producers will not have surplus to invest for exploration and production. This will eventually reduce production. However, he did not comment on retail fuel prices, which have been stable since March 16.