New Delhi, May 1 (H.S.): Due to ongoing uncertainty in the global economy and the fear of a recession in the United States, crude oil prices in the international market are continuously under pressure. This pressure has resulted in a significant decline of about 16 percent in crude oil prices in April, marking the largest monthly drop in crude oil prices in the last three and a half years.
As a result of the price decline, crude oil in the international market has once again fallen below the $60 per barrel mark. According to Indian time, by 4 PM today, Brent crude had fallen to $59.52. Similarly, West Texas Intermediate (WTI) crude had slid down to $56.58 per barrel.
Crude oil prices have reached their lowest level in the last four years. It is believed that there could be further declines in crude prices in the coming days. A significant reason for this is the announcement by the Organization of the Petroleum Exporting Countries Plus (OPEC Plus) to increase crude oil production. A crucial meeting of OPEC Plus countries is scheduled for May 5, where a formal decision regarding the increase in crude oil production may be made.
Saudi Arabia, leading the OPEC Plus countries, has indicated that it is not in favor of cutting production to support the international oil market. On the contrary, it is in favor of increasing crude oil production to strengthen its market share in the international arena.
The attitude of Saudi Arabia and other OPEC Plus countries is completely opposite to previous market strategies, which aimed to balance crude oil prices by cutting production. It is being claimed that eight member countries of OPEC Plus, including Saudi Arabia, have agreed to the issue of increasing crude oil production. This issue could now be formally accepted in the upcoming meeting on May 5.
The increase in crude oil production and the uncertainty surrounding the tariff war in the international economy have raised concerns about a significant drop in crude oil prices in the coming days. A report from Goldman Sachs states that if OPEC countries increase crude oil production and tensions regarding tariffs in global trade persist, crude oil prices could fall below $40 per barrel.
The decline in crude oil prices in the international market is good news for countries like India. India is one of the largest oil importers in the world, sourcing nearly 80% of its crude oil needs from the international market. Therefore, if crude oil prices decline, it will help reduce the trade deficit and also ease inflationary pressures.
Market experts say that for every $10 drop in crude oil prices in the international market, the country’s current account deficit decreases by about 0.30 basis points. Clearly, if the price of crude oil continues to decline, it may adversely affect the income of oil-producing countries, but nevertheless, it will provide considerable relief to India and other oil importers like it.
Hindusthan Samachar / Jun Sarkar
