International oil prices began to reverse and India slashed domestic petroleum prices just days before the government in Pakistan increased prices in an early-morning notification on Friday.
Oil is sinking on the reports that Saudi oil output is about to surpass 10 million barrels per day for the first time since early 2020. Another reason for the decline concerns Iran. Tehran and world powers have agreed to resume talks on the Iranian nuclear programme. The negotiations are expected to start on November 29 in Austria’s capital, Vienna. Iranian Deputy Foreign Minister Ali Bagheri Kani says the date was set in a phone call with European Union mediator Enrique Mora, Aljazeera reported on Wednesday.
The reduced oil production had caused the crude oil prices (WTI) to increase from $62 in August to nearly $84 in October. on October 25, WTI traded at 83.20 while brent traded at $85.99. When the world economy opened after the coronavirus epidemic the oil-producing countries had decided to limit production.
Oil has registered a drop of over $5 per barrel
However, the oil trend has reversed this month after prices ended the rally in late October. Since November 2, a downward trend has been seen and WTI prices fell to $78.16 and brent to $80.54 on November 4. Oil has registered a drop of over $5 per barrel.
Pakistan purchases oil from the middle eastern markets. Saudi Arabia has recently reopened its oil on deferred payments facility for Pakistan.
Diesel becomes cheaper by Rs27 in India
Meanwhile, India has reduced taxes on petroleum products to enable price reduction. The decision was made on the eve of Diwali, the Hindu festival of lights.
Petrol and diesel prices in India vary from city to city. In the national capital, Delhi, petrol prices fell by INR6.07 (PKR13.88) to INR103.97. Diesel rates were slashed by INR11.75 (PKR26.86) to INR86.67, said Indian news outlets.
Pakistani officials often draw a comparison between the fuel prices in Pakistan and fuel prices in India, almost always converting the cost into Pakistani rupees.
According to the Indian media, the decision to cut excise duty on fuel prices may cost the government INR600 billion ($7.38 billion).
There is a reason that the Indian government is letting go of such huge revenues. “High fuel prices have been hurting the margins of corporates as well as farmers, who contribute a significant chunk to the economy,” news agency Reuters said in a report.
Indian economists say after the petroleum price hike on October 20, inflation expectations were building up in the country.
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