Petrol and diesel prices in India were slashed by 30 paise a litre and 25 paise a litre, respectively, on Wednesday as crude oil rates dropped due to a price war between Saudi Arabia and Russia. In Delhi, however, the prices of petrol and diesel went down by Rs 2.69 and Rs 2.33 per litre, respectively.
Fuel prices have been on the decline since February 27, and are likely to continue plummet further for the rest of the week. Rates have fallen by around Rs 5 a litre so far in 2020, according to Mint.
In Delhi, a litre of petrol was available at Rs 70.29 per litre and diesel at Rs 63.01 per litre on Wednesday. In Mumbai, petrol was selling at Rs 75.99 per litre and diesel at Rs 65.97 per litre. In Chennai, a litre of petrol will now cost Rs 73.02 per litre whereas diesel will be Rs 66.48 per litre.
On Monday, petrol prices dropped below the Rs 71-mark for the first time since early July 2019 as crude oil prices fell heavily – the highest since 1991 – as Saudi Arabia started a price war with Russia. Saudi Arabia slashed its prices and said it would release its hoarded supply into a market affected by falling demand because of the coronavirus epidemic.
Saudi Arabia hopes to punish Russia for expressing reluctance at production cuts proposed by the Organization of the Petroleum Exporting Countries, or OPEC. Russia is the world’s second-largest producer of crude oil, while Saudi Arabia is the world’s largest exporter. OPEC and other producers supported production cuts in a bid to stabilise supply following the coronavirus outbreak.
Saudi Arabia plans to boost crude output above 10 million barrels per day in April, after the OPEC+ deal comes to an end. The country has begun the price war with Russia by cutting its official selling prices for April for all crude oil grades to all places by between $6 to $8 a barrel.
Global crude oil prices are determined by demand and supply, and change all the time based on how much buyers are willing to pay. Fuel prices in India are set by the government daily. India relies on imports to satiate its oil requirements and any change in worldwide prices impacts its economy. Domestic crude oil, which forms the raw material for petrol, diesel, and other petroleum products, is also priced as per international standards. West Asia, especially Iraq and Saudi Arabia, contribute to over two-thirds of India’s oil imports.