Oil Market

Oil and Natural Gas Corporation (ONGC), the state-owned upstream player, recorded a sharp 9.63 per cent drop in crude oil production to 1553.65 TMT in May on the back of decreased output from the company's onshore and offshore blocks with its offshore production also getting hampered due to the destructions caused by cyclone Tauktae during the month.

As per the data from the Department of Consumer Affairs, the prices of edible oils are now coming down over the past month, and in some cases, the decline is by as much as nearly 20 per cent, as shown in prices in Mumbai. It said the price of palm oil was Rs 142 per kg on May 7 but has come down to Rs 115 per kg, a drop of 19 per cent, and of sunflower oil.

"Necessity is the Mother of (Re)invention" features results from a global survey of more than 200 oil and gas executives and introduces Accenture's "Reinvention Index," which analysed the companies across key factors related to reinvention. Accenture classified the 10% of companies that scored the highest in the Index - who are setting the pace for reinvention through bold and decisive action

According to a research report by ICICI Securities, Brent has recovered and is over $ 60/bbl since February, 21 vs April, 20 low of $ 21/bbl driven by demand recovery from lows and OPEC+ capping supply to ensure supply deficit since July last year. "OPEC+ capping supply until demand recovers is estimated to ensure supply deficit of 1.3 million barrels of oil per day in calendar year 2021 and keep Brent above $60/bbl," the brokerage said.

It however, noted that with 'OPEC+' capping supply to ensure supply deficit, impact on oil prices is likely to be muted."Fresh surge in Covid cases, consequent lockdowns and slow rollout of vaccines, especially in Europe, are likely to delay demand recovery to pre-Covid levels," the report said.

America has steadily improved its exports post sanctions and has now become second biggest oil supplier to India, the worlds third largest oil consumer. As per trade data, US supplied almost 2.2 million tonne (mt) of oil to India in February, higher than even Saudi Arabia, which had traditionally been among the biggest exporters of oil to India.

The glut in the oil market and deep suppression of demand during the peak of pandemic in 2020 had pushed down crude oil prices to unprecedented levels. Though crude prices have recovered over the vaccination drive against Covid and a pick in demand coupled with  unilateral production cut announced by Saudi Arabia, cess puts domestic crude at a disadvantage against imported oil.

Sources privy to the development said that with oil market globally turning into a buyer's market amid oversupplies and Covid-19 related demand destruction, India sees no point in immediately seeking exemption from sanctions but would rather wait for an opportune time to make its case.