On Jan 7, the average price paid by India for importing crude oil was $29.24, substantially lower than the $33 level seen in international oil exchanges such as NYMEX. India has long-term crude oil sourcing arrangements in place, which often results in a discount over cash prices.
In terms of rupees too, a crucial barrier — Rs 2,000 per barrel — was breached on the day. The price fell to Rs 1956.65 from Rs 2090.22 per bbl on the previous day.
Since oil barrel contains 159 liters, the price of a liter of crude oil has fallen to Rs 12.30, implying a price of around Rs 17-18 for a liter of petrol and diesel before taxes and transportation costs, but after refining costs.
India is very exposed to global crude oil price fluctuations due to its near complete reliance on overseas suppliers. The country imports about 75% of its crude oil needs, and also has very little natural gas to fall back on.
Retail petrol prices have more than doubled over the last six years or so due to the rise in global commodity prices. However, despite a steep correction in the prices, retail prices in India have corrected only by around 20% in the last one year.