Crude Oil Price Down / Crude oil has become cheaper than Coke and Pepsi, will petrol become cheaper now?

Crude Oil Price Down: In the last two days, there has been an unprecedented decline in the prices of crude oil in the international market. Due to global economic instability, US-China trade war and the policies of OPEC+ countries, crude oil has reached a three-year low. Despite this decline, the prices of petrol and diesel in India have remained stable for almost a year, raising many questions in the mind of the common consumer.

The increase in tariffs by former US President Donald Trump and the announcement of retaliatory tariffs by China have created a stir in the global market. In just two days, crude oil prices have seen a decline of up to 13.5%. While Brent crude has fallen below $ 65 a barrel, US WTI crude is trading below $ 62. During the session, it reached $ 64.03 and $ 60.45 a barrel respectively, which is the lowest level in the last four years.

According to the calculations done by the business team of TV9 Bharatvarsh, a barrel contains 159 liters of crude oil. At the rate of $ 65 per barrel, the price per liter is only $ 0.40 i.e. about ₹ 35. In comparison, this price is even less than cold drinks like Coke and Pepsi, whose market price is around ₹ 65 per liter.

At present, the average prices of petrol and diesel in India are more than ₹ 95 and ₹ 88 per liter respectively. In metros like Delhi, Mumbai, Kolkata and Chennai, these prices are beyond ₹ 100. Surprisingly, in the last one year, the prices of petrol and diesel were cut by ₹ 2 per liter only once, in March 2024. Since then, there has been no change in domestic prices despite the fall in the international market.

After China announced to impose 34% additional tariff on American goods, the fear of recession in the markets has intensified. Global investment banks like JP Morgan have increased the possibility of global recession from 40% to 60%. At the same time, big financial institutions like Goldman Sachs and HSBC have reduced the forecast of oil demand and prices for the year 2025.

According to energy specialist Scott Shelton, if global demand decreases further, WTI crude prices may fall to $ 50 in the near future. The decision of OPEC+ to increase production will also put pressure on prices. If this happens, import-dependent countries like India should benefit from it — but the government's tax policy and windfall tax may hinder this.

Anuj Gupta of HDFC Securities believes that given the current circumstances, petrol and diesel prices in India should be reduced by 5 to 25 rupees per liter. However, this reduction will depend on the tax policy of the government, the profit policy of oil marketing companies and global economic conditions.