International Crude Oil Rate Drops From 3-Year High

New Delhi: Just a few days back, the prices of the Crude oil have come down to around USD 83 per barrel now from the three year high level of more than USD 85 a barrel.

According to a agency report, interestingly, if the price remains constant, then fuel prices in India could be reduced further. However, the Organization of the Petroleum Exporting Countries (OPEC) decision to slightly increase the production could push up the prices again.

Notably in October, the price of Crude oil had settled higher as the OPEC countries denied the US request to increase output even after demand back to the pre-pandemic levels.

In the last two months, crude oil has climbed 19 percent.

This had affected the petrol-diesel markets around the world, which includes India. Brent crude price breached the $85 per barrel mark to hit its highest level since 2018. Brent crude was priced at $42.5 a barrel a year ago, which had almost doubled then.

The reason for the rise in crude prices was that despite economy activity started recovering but the production of crude oil remains the same.

One of the reasons for the increase in the demand for crude oil is the increase in the prices of coal and natural gas. These commodities are used as fuel for power generation.

On the other hand, crude oil production at a record high was hit by two big storms that hit the US in September. The OPEC+ group of oil-producing countries had said in its latest round of meetings that they would increase total crude oil supplies by only 400,000 barrels per day in November, despite a sharp rise in prices.

The output of the top oil producing countries - Saudi Arabia, Russia, Iraq, the United Arab Emirates and Kuwait - will remain about 14 per cent below the reference level of production, even after increasing in November. Supply is short due to insufficient production.

OPEC+ countries had agreed to a major cut in the supply of crude oil in the year 2020 due to global travel restrictions due to COVID 19. Now the demand for crude oil has increased but the pace of increasing the production of the group is slow.

However, India and other oil importing countries had called on OPEC+ to rapidly boost oil supplies. They have argued that higher crude oil prices could undermine the recovery of the global economy.

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