Most of India’s income depends on the taxes from liquor, diesel and petrol and now everyone has many questions in their mind as crude oil prices turn negative as demand dries up. The price of US oil has turned negative for the first time in history.
Due to the COVID-19 lockdown effect, the demand for the crude oil has declined substantially and hence the oil producers are paying buyers to take the commodity off their hands over fears that storage capacity could run out in May.
The crude oil reserves has accumulated which may result in collapsing the entire oil market all at once. The price of a barrel of Brent Crude, the UK benchmark for oil has slipped below $20, its lowest level since 2002.
Here is a disappointing fact with this negative effect on crude oil. No petrol or diesel prices would get low due to this sudden effect. For one, the cost of the Indian basket of crude, which is the average of Oman, Dubai and Brent crude, was at $20.56 a barrel on 17 April.
India’s entire crude basket doesn’t represent WTI. Hence there would be no change in the petrol and diesel prices as you can observe.