The international energy market has witnessed a significant shift as crude oil prices have crashed by approximately 28 percent over the last 40 days. Despite this massive decline in global benchmarks, petrol and diesel prices in India have remained stagnant for the same period, while it has been about 40 days since May 25, the last time any significant movement was observed in domestic fuel rates. As international crude prices continue to soften, speculation is mounting regarding when government-owned oil marketing companies will pass on these benefits to Indian consumers, while while the international market saw a slight dip on Friday morning, the overall trend indicates a substantial cooling off from previous highs.
Global Market Trends and Current Benchmarks
In the international market, crude oil prices showed minor fluctuations towards the end of the week. While there was a slight decline on Friday morning, the market had closed with a marginal increase on Thursday, while john Kilduff, a partner at Again Capital, noted in a report by Reuters that the market is currently experiencing some short-covering. He emphasized that the focus has shifted from supply shortages to the actual volume of supply entering the market. 60 dollars. During the session, both benchmarks touched their lowest levels since the escalation of geopolitical tensions in late February. 78 percent. The most striking fact remains the 28 percent drop in crude prices over the 40-day window, contrasting sharply with the frozen fuel prices in India.
Geopolitical Developments and US-Iran Negotiations
Positive signals from geopolitical negotiations have also played a role in stabilizing the market. Mediator Qatar has indicated that the United States and Iran have made progress in talks aimed at a permanent peace agreement. This potential deal could end the four-month-long conflict that has previously disrupted major oil shipping routes through the Strait of Hormuz, while a spokesperson for Qatar's Foreign Ministry stated on X that there has been positive progress on matters related to the memorandum to stop the war. Although there are no definitive signs yet of a concrete step towards permanent peace, the dialogue continues. The next meeting between Iranian and US negotiators is scheduled to take place after the funeral of Iran's late Supreme Leader Ayatollah Ali Khamenei on July 9.
Demand Concerns and Supply Dynamics
Bjarne Schieldrop, Chief Commodity Analyst at SEB, highlighted that oil supply through the Strait of Hormuz remains steady, while Also, countries are drawing from their strategic reserves. A significant factor keeping prices low is the lack of a strong recovery in crude oil demand from China. This creates a dynamic where prices drop sharply before potentially rebounding. According to trade sources and shipping data, at least five supertankers carrying a total of 10 million barrels of Saudi oil loaded from Ras Tanura have moved out of the Strait of Hormuz. This follows Saudi Aramco's adoption of spot pricing to boost sales in Asia. Phil Flynn, Senior Analyst at the Price Futures Group, mentioned that while refineries can get the oil they need, processing and distribution remain complex. The market perceives the situation in Iran to be improving, despite ongoing volatility.
UBS Revises Oil Price Forecasts Downward
The Energy Information Administration reported that US crude oil stocks reached their lowest level since 2018 last week due to increased demand from domestic refineries. Despite this, UBS has cut its price estimates for Brent crude. The bank cited increased shipping through the Strait of Hormuz, which handles 20 percent of the world's oil tanker traffic, as a reason for the revision. UBS lowered its third-quarter estimate by 25 dollars per barrel to 80 dollars and its fourth-quarter estimate by 10 dollars to 80 dollars. Plus, the 2027 forecast was reduced by 10 dollars to 75 dollars per barrel. In other developments, Nigeria has become the first OPEC member to join the International Energy Agency (IEA) as an associate member, strengthening ties between the global energy watchdog and Africa's largest oil producer. Meanwhile, geopolitical tensions persist as the Ukrainian General Staff reported an attack on the Lukoil-Nizhegorodnefteorgsintez refinery in Russia's Nizhny Novgorod region.
Current Fuel Prices in India (As of July 3)
Despite the global volatility, fuel prices in major Indian cities have remained unchanged.
- Petrol Price in Delhi: 102.12 per liter
- Petrol Price in Kolkata: 113.51 per liter
- Petrol Price in Mumbai: 111.21 per liter
- Petrol Price in Chennai: 108.01 per liter
- Petrol Price in Hyderabad: 115.73 per liter
- Petrol Price in Bengaluru: 110.89 per liter
Diesel prices for the same period are:
- Diesel Price in Delhi: 95.20 per liter
- Diesel Price in Kolkata: 99.82 per liter
- Diesel Price in Mumbai: 97.83 per liter
- Diesel Price in Chennai: 99.66 per liter
- Diesel Price in Hyderabad: 103.82 per liter
- Diesel Price in Bengaluru: 98.80 per liter
20 per liter respectively. 83 per liter. 55 per liter in recent updates. Experts suggest that as long as crude prices remain low, the freeze on domestic prices might continue, despite the 7 to 8 percent increase seen in fuel prices during the month of May.