Oil companies gain as oil prices plunge

The declining crude oil prices have benefited the government-owned oil companies as they have made tidy profits over the fortnight.

The crude oil prices plunged by around 9 per cent, from USD 54.93 a barrel to USD 49.72 a barrel on March 14, 2017; while the petroleum and diesel prices remained unchanged at Rs 71.14 per litre and Rs 59.02 per litre, respectively. Due to this, the oil companies generated a profit of Rs 3.67 on petrol, up by Rs 1.67 a litre and Rs 2.20 on diesel, up by Rs 1.12 a litre, as on March 14, 2017.

The rupee also strengthened against the dollar during this period, appreciating from Rs 66.95 per dollar on March 1, 2017 to 66.18 per dollar on March 14, 2017.

The price of crude oil was revised to USD 50.53 per barrel as on March 21, 2017, with the rupee-dollar exchange rate being in the range of Rs 65 per dollar. However, the petrol and diesel prices have remained the same up to March 23, 2017.

A global oversupply of crude oil and the strengthening of the rupee has equipped the Indian industry to contain international oil prices between USD 50-55 per barrel. This has helped the Indian industry avoid the brunt of increased inflation and rising fiscal deficit which could have followed as an aftermath of rising oil prices due to cut in oil production by OPEC.