Close on the heels of a global drop in oil price on account of a slump in demand driven by impact of coronavirus on global economy, petrol rates in India were cut by 15-18 paise per litre on Sunday, while diesel prices were cut by up to 21 paise.
According to data from Indian Oil Corporation, petrol rates were Rs 71.71 per litre in Delhi, while diesel was Rs 64.30. Petrol rates in Mumbai, Chennai, Bengaluru and Kolkata were Rs 77.40, Rs 74.51, Rs 74.17 and Rs 74.38, while diesel rates in the same cities were Rs 67.34, Rs 67.86, Rs 66.50 and Rs 66.63.
The petrol rate in Delhi is the lowest in six months—the last time prices were at this threshold was in September 2019. Diesel prices, in turn, were the lowest in eight months. The drop in prices on Sunday was 17 paise per litre for petrol and 21 paise per litre for diesel.
Worldwide, the price of Brent Crude dropped to below $50 on Saturday as investors sold in all sectors on a day of record stock market crashes. As of publishing, the price of Brent Crude was 49.67 according to Oilprice.com. Brent Crude prices have been at their lowest levels since 2018 after a decline in consumption in China was seen as the reason behind crude prices dropping in early February.
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With over 85,000 confirmed cases of coronavirus across the world, the World Health Organisation has issued the highest-possible alert as fears compound that a global pandemic could be emerging.
In a bid to drive prices up, Saudi Arabia has reportedly asked members of the OPEC+ group of oil producing nations to cut production by 1 million barrels per day.
The relief in prices may be short-lived, however. Petrol and diesel prices are expected to go up from April 1 as BS-VI norms kicks in for fuels. Indian Oil Corporation chairman Sanjiv Singh told reporters on Saturday that a marginal increase in retail prices could be expected from April 1, when the fuel sulfur content across the country changes from 50 parts per million (ppm) to 10 ppm.
Many players in the oil industry have revised downwards their forecasts for global consumption in 2020. The US Energy Information Administration has predicted global demand to average 101.7 million barrels er day in 2020, down 378,000 bpd from the January 2020 forecast. A combination of factors from the warmer winter in Europe driving lower demand to the impact of coronavirus was cited for the decline.
India imports 83 per cent of its oil needs and prices at home are closely connected to global prices.
The impact of the coronavirus on global economic growth, in particular China’s, mirrors what happened during the SARS outbreak of 2003, which saw fuel demand, in particular that for jet fuel, slump in China as a result of the virus.