Kathmandu. The U.S.-Iran war is over. After the US-Iran peace deal, the price of crude oil in the international market has been continuously falling.
Crude oil prices have fallen to their lowest level in four months since the last fall and are now below $77 after reaching $120 a barrel during the war.
The rise in oil prices was marked by major oil and gas crises in countries from Pakistan and Bangladesh to the UK and India. In the case of neighboring India, due to high crude oil prices, the state-owned oil companies had to increase the price of petrol and diesel for almost four years, and this was done not once or twice, but four times. Now the price of crude oil has fallen. Hopes of a reduction in the price of petrol and diesel are also increasing.
On February 28, the United States and Israel launched their first offensive against Iran, shutting down the Hormuz, a key sea route that supplies 20 percent of the world’s oil and gas needs. After the closure of Hormuz, crude oil suddenly started trading around $120 in April.
This resulted in a sharp increase in the price of fuel and gas in the countries. As a result, inflation increased and the United States itself was affected by it. Now, after the peace agreement between the US and Iran, the price of oil has started to fall suddenly. Brent crude oil was trading at $76.47 a barrel, WTI at $72.63 and Murban at $69.63 a barrel. These are the lowest crude oil prices in the last 4 months.
TAG_OPEN_strong_23 Will petrol and diesel be cheaper?
Now the question is: when the price of crude oil skyrocketed and oil companies were forced to increase the price of petrol and diesel due to losses. Will the price of fuel come down now that the price of oil is cheaper?
Kainat Chainwala, AVP of Commodity Research at Kotak Securities, said the US-Iran deal eased global tensions and gave the US Treasury permission to sell Iranian oil and petroleum products for 60 days, raising hopes of a recovery in global supply chains. More than 30 million barrels of crude oil were shipped to Asia last week, according to tanker tracking data.
According to Chainwala, Iran is offering significant discounts to Asian buyers. Meanwhile, Gulf producers have resumed operations at major plants. If traffic through Hormuz is normal, oil will soon reach the market. However, fuel prices are unlikely to change significantly until demand improves.
Research by Motilal Oswal Wealth Management shows that cheaper oil helps reduce the country’s import bill. It strengthens the rupee and reduces inflationary pressures. However, consumers who expect an immediate reduction in the prices of petrol and diesel may have to wait. They are unlikely to diminish anytime soon.
This is because the price of fuel in India depends on a number of factors beyond the price of crude oil, including taxes, processing margins and marketing costs. However, this fall in crude oil prices may provide some relief to India’s import bill.
Petroleum products are supplied to Nepal from India. Therefore, Nepali consumers will not be able to get petrol and diesel at a lower price until the price of petrol is reduced in India.
