The June contract of Brent on the Intercontinental Exchange (ICE) is currently around $16.74 per barrel, lower by 13.40 per cent from the previous close.
The slump in crude oil prices has largely been on the back of the nearly no demand amid the coronavirus crisis while supplies have been continuous. Demand for oil has shrunk by almost a third or 39 million barrels per day this month.
The fall in Brent prices augurs well for India as it comprises over 25 per cent of India's imports. Rest of the Indian basket includes crude from the Gulf region, Oman, also, some crude is imported from Venezuela and nominal amount from the US.
The WTI crude in the US, which in an unprecedented price movement fell below zero on Monday is currently trading over $10 per barrel. On Tuesday too, it was negative for a considerable duration.
Currently, the June contract of WTI on the NYMEX is trading at $10.77 per cent, 7.43 per cent lower from its previous close.
The decline comes despite the recent output cut agreement between the Organization of Petroleum Exporting Countries (OPEC) and its allies. There were hopes that agreement would stabilise oil prices, but with the Covid-19 pandemic continuing, there has been a large slip in demand that is not letting oil prices to pick up.
The current market is oversupplied on shrinking demand, creating a situation of free fall for crude.
The price of oil has now reached a point that it is increasingly becoming difficult for higher cost producers to remain in operation and rather look at declaring bankruptcy. A lot of US shale producers are in deep trouble and analysts expect that low oil price for few more months will result in a spate of bankruptcies in US.
With world demand now forecast to plunge by over 20 million barrels per day, a 30 per cent drop from last year, analysts say massive production cuts will be needed beyond just what has been agreed between the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers.