This pandemic outbreak of COVID-19 hit prices of crude oil.
Where the corona-virus destroyed everything such as human life and business etc. then the news arise on Tuesday that the crude oil prices had fallen below zero first time since 1986 in history.
The fall comes despite the recent output reduction deal between the Organization of Petroleum Exporting Countries (OPEC) and allies which, many expected, would stabilize the prices.
As per the Dabiel Yergin (Vice Chairman of IHS Markit Ltd.), said that “The May crude oil contract is going out not with a whimper, but a primal scream.”
The price of West Texas Intermediate Crude Oil is fell on Tuesday negative $ 37.65 a barrel in just a few hours.
According to Dow Jones Market Data a one-day drop of $55.90, or 306 percent, Brent Crude, the international benchmark was down 5.6% to $26.51.
In also addition, on Monday as per the Halliburton the ratio 6.7% cuts in reported earnings and announced a new budget. Oil stocks were falling in permanent trading, with Exxon Mobil down 5.4%.
According to Bjorner Tonhaugen (Head of oil at research firm Rystad Energy, “The problem of the global supply-demand inequality has started to manifest itself in prices.”
Higher crude prices adversely affects some industries such as tyre manufacturers, footwear, lubricants, paints, and airline companies. A fall in oil prices will drive production costs lower and stock prices higher.
Brent crude, which is what India buys has also seen a fall of about 5%, but prices are still hovering around $27 a barrel. It’s not as cheap as the WTI, which is the benchmark US oil.
But the question arises that When crude oil is tumbling to record lows every day, Indians haven’t seen that reflect in petrol and diesel prices at the fuel station.
The simple fact that an increase in taxes by the Government to support its revenue and higher marketing margins of state-run oil retailers to recover their losses.
The centre also collects additional excise duty by ₹ 1 per ltr. in the form of infrastructure and road cess and increased ₹ 2 per ltr. as special excise duty.
Retail prices of petrol and diesel are currently floating around ₹ 69.59 per ltr. and ₹ 62.29 per ltr., respectively, in the National Capital.
All these results in a much-needed tax gain for the Centre, which is facing a massive revenue shortfall.