C rude oil prices fell below the $100 a barrel mark on Tuesday after a two-week period, with costs rising to $139 a barrel, the highest in 14 years. Brent crude touched $102.7 a barrel on Wednesday, still up about 32 per cent from $78.11 a barrel at the beginning of the year.
Why are crude oil prices falling?
The rise in COVID-19 cases in China, the largest importer of crude oil, and indications that a nuclear deal with Iran could boost global crude oil supplies have helped cool oil prices that have been rising steadily since the start of the year. The Russia-Ukraine crisis.
China has announced a new lockdown to contain the spread of the COVID-19 infection, which has reached a two-year high in the country. Concerns about the impact of a surge in China on crude oil demand helped ease prices.
Separately, reports that the US, Russia and Iran are in talks to revive a 2015 nuclear deal have also eased supply concerns in the global market. Under the 2015 deal, Iran agreed to limit its nuclear program in exchange for exemptions from economic sanctions that restrict Iranian oil exports. Negotiations with Russia were stalled to guarantee that Western sanctions would not affect the country's economic relations with Iran.
However, Russian Foreign Minister Sergei Lavrov said on Tuesday that Russia had received a written guarantee that the agreement would allow the country to do its work freely. Experts noted that Iran could increase its crude oil production by about 1.5 million barrels per day in a few months if restrictions on oil exports were lifted.
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What is the impact in India?
India imports about 85 per cent of its crude oil needs, and high crude oil prices are usually converted into high prices of petrol and diesel at the pumps. However, oil marketing companies (OMCs) have kept petrol and diesel prices steady since November 4, while crude oil prices have risen by nearly 27 per cent during this period. Analysts are hopeful that OMCs will soon start raising petrol and diesel prices in line with international prices for petroleum products.
Union Petroleum and Natural Gas Minister Hardeep Singh Puri has said that the government is in talks with Russia for procurement of crude oil. "Discussions are currently underway." "There are many issues like how much oil is available."
Russia is offering crude oil cargo at concessional rates as the European Union has decided to ban seven Russian banks from the SWIFT financial transaction messaging system, making it difficult to find buyers for Russian oil cargo. Some buyers have also decided against purchasing Russian crude oil over the perceived damage that could be caused by the purchase of Russian crude oil during their invasion of Ukraine.
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