Big news for Indians: the price of crude oil dropped by 8%, the most in seven years.
Prices for crude oil are still falling. In the first week of the new year, the price of crude oil dropped from $80 to $73 per barrel. Over 8% of the price decline occurred in just five days. Reuters, a news organisation, reports that Brent prices have not dropped this much since 2016. Experts anticipate more declines in the future. However, the price drop has been quite beneficial for Indian businesses. The pricing of gasoline and diesel has not altered at state-run oil companies HPCL, BPCL, and IOC in 15 months.
News agency PTI reported that oil companies are making a profit of Rs 10 per litre of gasoline, but retail prices have not been cut to cover earlier losses. According to the ICICI Securities report, the companies are losing Rs. 6.5 per litre of diesel. Major oil companies have not changed the prices of gasoline and diesel for 15 months.
Earning opportunities for investors:
Companies like HPCL, BPCL, and IOC will directly benefit from this fall in crude oil prices. At the same time, tyre manufacturing companies and paint companies will also benefit from it.
The economy directly benefits:
When the price of crude oil falls by one dollar, India’s import bill falls by about $29,000 million. By reducing 10 dollars, 2 lakh 90 thousand dollars are saved. If the government can save so much, then it is clear that the benefits will be passed on to the common man.
How India will benefit:
India buys 80 percent of its crude oil needs from abroad. For this, a huge amount of money has to be spent from the foreign exchange reserves. In such a scenario, whenever crude oil becomes cheaper, India benefits. The rupee strengthened against the dollar, and inflation was brought under control. It is clear that when cheap crude oil comes in from abroad, its price will remain low in the domestic market as well. According to SMC Global, the country’s oil companies save 45 paise per litre on a $1 drop in crude oil.