Global oil prices hit a seven-month low

Increased supply by several oil producing countries despite cautionary advice from the Organisation of the Petroleum Exporting Countries (OPEC) and others to reduce output has led to global crude oil prices falling by $1.29 to a low of $45.62 a barrel on Tuesday night. This is the lowest price of crude oil since November 15, 2016 when prices breached the $50 mark. The US crude futures contract for July fell by $1.27 to $42.93 before it recovered to $43.10, a fall of more than 15 percent since late May.

For India, which imports close to 80 percent of its annual consumption of 212.7 million (2016) tonnes as per BP statistics, a fall in prices of oil will facilitate huge gains. Whether the fall in crude oil prices translates into cheaper fuel for motorists in India remains debatable. Motorists in India continue to take a sizeable hit on their wallets when it comes to tanking up on fossil fuels. As per the daily fuel revision implemented in the country a motorist in Mumbai pays the highest fuel price. As of June 21, 2017, a litre of petrol costs Rs 75.79 and diesel, Rs 59.34.

A good portion of the fuel price in India comprises of government taxes excise and VAT. The table below reveals the petrol price build-up, detailed on the Indian Oil Corporation website.