Global Oil Prices Hit Lowest Since Mid-2021 Amid US-China Tariff War

Oil prices have plummeted to their lowest levels since the middle of 2021, as the tariff conflict between the US and China sends shockwaves through global markets. This development presents an opportunity for state-run fuel retailers to adjust pump prices, potentially easing the economic strain on consumers.

Benchmark Brent crude saw a significant drop, slipping $5.55 a barrel to $64.59, while US WTI crude lost $5.87, settling at $61. This downturn follows OPEC+'s decision to increase production volumes amidst growing fears of a trade war and potential recession.

Potential Benefits for India's Economy

With India importing 85% of its oil, the current price slump could reduce the nation's import bill and current account deficit. Oil Minister Hardeep Puri hinted at a possible fuel price cut, stating, "if this trend continues, there is reasonable expectation (of a fuel price cut)." Such a move would lower energy costs across the economy and provide relief to household budgets.

Historical Context of Fuel Prices in India

Fuel prices in India have remained static since a Rs 2 per litre reduction on March 14, 2024, just before the Lok Sabha elections. Prior to that, prices were frozen following excise duty cuts in May 2022 and November 2021, which collectively reduced duties on petrol and diesel by Rs 13 and Rs 16 per litre, respectively.