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Current Affairs

Global fuel prices go up

Date: 21 October 2021 Tags: Miscellaneous

Issue

The price of crude oil is nearing its highest level since 2018 after global economy is witnessing recovery.

 

Background

Since the OPEC+ group controlled the production output, the crude oil prices have been escalating.

 

Details

  • Despite sharp increase in demand for crude oil, supplying countries have kept the production within limits.

  • The demand and supply mismatches have played a major part in keeping the prices high. The prices have nearly doubled compared to a year ago.

 

The OPEC+ stand

  • OPEC+ has stated that it will increase its daily production by 400,000 barrels per day even though it will still be lower than the demand.

  • The production levels of countries such as UAE, Saudi Arabia, Iraq, Kuwait and Russia are still 14% below the levels a year ago.

 

Global impact

  • India and other nations have asked OPEC+toboost oil supply faster in order to aid economic recovery post the pandemic.

  • Natural gas prices have been at an all-time high due to shortages. Countries such as US have low output owing to cyclone and Russia has also not been able to increase its supply.

  • Coal shortages have also gripped the world. China and India have been the major sufferers while Indonesia’s coal business has bloomed.

 

Impact on India

  • Prices of petrol and diesel are at record high in the country owing to high crude oil prices in international market.

  • Demand for diesel is expected to grow during the festive season. Majority of the fuel is used in industries and agriculture.

  • The prices of Compressed Natural Gas (CNG) used as a transport fuel and Piped Natural Gas (PNG) used as a cooking fuel have been increasing continuously.

  • Thermal power plants are unable to buy imported coal due to high international prices. This has created power shortage in states such as Rajasthan and Punjab.