New Delhi: Petrol on Friday crossed the Rs 90-mark in Mumbai – the first time ever. Those who expect the prices to stabilise at this level are in for a major disappointment. In fact, the worse is still to come. Oil prices jumped more than 2 percent to a four-year high on Monday after Saudi Arabia and Russia ruled out any immediate move to increase production. Only an increase in global supply can dampen the prices. OPEC leader Saudi Arabia and its biggest oil-producer ally outside the group, Russia, have effectively rebuffed a demand from Trump for moves to cool the market.
“It is now increasingly evident, that in the face of the reluctance to raise output, the market will be confronted with supply gaps in the next three-six months that it will need to resolve through higher oil prices,” an oil strategist told Reuters. Commodity traders said that Brent could rise to $90 per barrel by Christmas and pass $100 in early 2019, as markets tighten once US sanctions against Iran are fully implemented from November.
The US sanctions could lead to a loss of 1.5 million barrels per day. And that is a conservative estimate. Unplanned disruptions from Venezuela to Libya and Nigeria have further tightened the market just as global demand approaches 100 million bpd for the first time. The threats of disruption and other factors have helped to lift Brent crude futures to nearly $80 a barrel this month, a level not seen since 2014.
CUT IN IMPORTS: India, the world’s third-biggest oil importer, is considering cutting oil purchases to soften the blow, Indian Oil Corp Chairman Sanjiv Singh said on Monday. Refiners maintain 7-8 days of inventory in tankages besides carrying stocks in pipelines as well as ships in transit. They are looking at reducing these so that monthly imports of crude oil can be reduced, he said.
