With petrol priced at Rs 86.56 per litre in Mumbai, fuel prices are at an all-time high. In Delhi the petrol price touched Rs 79.15 per litre, while in Chennai the price as on September 3 is Rs. 81.92 per litre.
Union Petroleum and Natural Gas Minister Dharmendra Pradhan on September 2 blamed “external factors” for the rise in domestic prices of petrol and diesel, but said the increase is temporary.
Factors responsible for the drop in production of crude oil have caused a spike in fuel prices in India. OPEC (Organisation of the Petroleum Exporting Countries) had promised that it will raise production by one million barrels per day, which has not taken place, said Dharmendra.
Besides, crisis in coutries like Venenzuela and Iran and weakening of global currency against the dollar are other contributing factors in the price rise.
Earlier the fuel prices were revised on 1st and 16th of every month. From mid-June last year, however, oil companies dumped the practice and instead the fuel prices are now being revised every morning at around 6 am.
Crude oil prices drop
As per agency reports, Oil prices fell on September 3 owing to rise in supply from OPEC and the United States, outweighing concerns that falling Iranian output will tighten markets once US sanctions bite from November. International Brent crude oil futures were at $77.43 per barrel at 0222 GMT, down 21 cents, or 0.3 percent, from their last close. US West Texas Intermediate (WTI) crude futures were at $69.62 per barrel, down 18 cents, or 0.3 percent, from their last settlement. Output from the producer cartel of the OPEC rose by 220,000 barrels per day (bpd) between July and August, to a 2018-high of 32.79 million bpd.
Despite the price dip, according to experts at trading for Asia-Pacific at futures brokerage OANDA said Brent was supported by the notion that US sanctions on Iranian crude oil exports will eventually lead to constricted markets, which is likely push up prices.
This is also because Iranian production is already showing signs of decline, falling by 150,000 barrels per day (bpd) last month. Analysts predict an economic slowdown because of trade disputes between the United States and other major economies including China and the European Union. And would have an effect on oil demand. Amid rising trade tariffs by Washington and Beijing, China's manufacturing activity has grown at a slow pace owing to employers cutting more staff on account of shrinking export orders.
Despite this, experts at OANDA said it was too early to say whether an economic slowdown would put a serious dent on oil prices.