NEW DELHI: Oil prices on Friday hit their lowest since the middle of 2021 as China’s return fire against US president Donald Trump’s reciprocal tariff rippled across markets, giving the Centre an an opportunity to partly cushion the impact by letting state-run fuel retailers reduce pump rates.
Benchmark Brent slipped $5.55 a barrel, or nearly 7.9%, to $64.59 after hitting $64.15 intraday. US WTI crude lost $5.87, or 8.8%, to $61 after touching $60.81 a barrel, Reuters reported.
Thursday’s decision by OPEC+ grouping to hasten plans to pump up volumes, even as clouds of a trade war and recession started gathering after Trump’s April 2 tariff move, exacerbated oil’s woes. Goldman Sachs became the latest investment bank to lower forecast for Brent this year by 5.5% to $69 a barrel citing those fears.
The projection gives a window to cut fuel prices, which will help reduce the inflationary impact of US tariffs on India. Oil minister Hardeep Puri last week agreed expectations of a fuel price cut were “reasonable”. “I can tell you seriously if the audience asks when will fuel prices come down further, I would say if this trend (low oil prices) continues, there is reasonable expectation (of a fuel price cut),” Puri told the Times Now Summit 2025.
Cheaper fuel will lower energy costs for the economy and allow household budgets some breather. Since India meets 85% of its oil requirement through imports, subdued prices will bring down the import bill and current account deficit. This will lend support to the Rupee and headroom for social spending to continue.
Oil prices have been declining after April last year, except for brief rallies in June and September 2024. But fuel prices have remained frozen since they were last cut by Rs 2 per litre on March 14, 2024, just ahead of the Lok Sabha elections.
Before that, prices had remained frozen since May 22, 2022 when the Centre reduced excise duty for the second time after November 4, 2021. The two reductions together had brought down the excise duty on petrol and diesel by a total of Rs 13 and Rs 16 per litre, respectively.
