Buying fuel could soon be cheaper than milk, as oil price has plumbed to new post-crisis depths, with the international benchmark hitting its lowest level since 2004.
Oil producers, particularly West Asia, Iran and Russia, continue to pump unwanted fuel into the market amid the ongoing supply-glut, prices for Brent crude, a global benchmark, slid as low as $ 36.04 per barrel (Rs 2,390 per barrel) on Monday, an 11-year low.
The prices dipped lower than they did even during the financial crisis of 2008 – 2009, when demand plunged along with the global economy.
U.S. and Canadian producers have made rapid advancements in their ability to find unconventional oil. Despite this, Saudi Arabia and other global exporters have refused to cut their output, leading to a historic flood of oil as producers around the world fight to keep customers.
Lower oil prices will benefit India — the fourth largest oil consumer. Nearly 80 per cent of all of our oil needs are imported, largely from West Asia and Africa, resulting in a massive import bill.
Petrol prices would have been lower by Rs 5.22 a litre and diesel by Rs 2.84 a litre in India, but due to high taxes like excise, customs and VAT, refined petrol and diesel sold at Rs 59.98 and Rs 46.09 per liter respectively.
Some experts even predict prices may touch $20 or Rs 1,320 per barrel or Rs 11.24 per litre. If it happens, including taxes, diesel and petrol will be cheaper than a litre of milk, which today costs about Rs 50.
Saudi exporters soon may have to compete with U.S. producers after President Barack Obama on Friday signed a law that removed the 40-year ban on U.S. oil exports.