The central government has finally stepped in to rein in fuel prices that have surged to historic highs in the past few weeks.
The government on Thursday reduced excise duty on petrol and diesel by Rs 1.50 per litre and said the oil marketing companies (OMC) will absorb the impact to the tune of Re 1 per litre.
The consumers will get a benefit of Rs. 2.50, said finance minister Arun Jaitley while announcing the decision.
Oil marketing companies hit a 52-week low on the back of the news. The finance minister also said that the move will have a minimal impact on India’s fiscal deficit and expressed confidence of maintaining the fiscal deficit target of 3.3 percent for the current fiscal year.
Manisha Gupta discusses the outlook on crude prices and the global demand-supply situation with Bart Melek, global head of commodity strategy, TD Securities and Vikas Halan, senior vice president of corporate finance group, Moody's Investor Service.
“At this point, the markets take some bit of a pause. I would suspect some of the stocks that have been in for a while may want to take some profits and wait and see what happens."
Any correction is really going to be quite modest, the supply-demand fundamentals look increasingly tight as the sanctions against Iran start later in the year and the situation there is likely going to get stricter, Melek said.
Vikas Halan: “For our rating purposes we continue to use the range of $45-65 per barrel. However, at this point in time to give a price for a particular week or month it doesn’t move the needle from our side. We look at annual averages for oil prices which we look at this year at around high 60’s -low 70’s."
Then moving forward in 2019, we expect the average to stay very much flat, he said.