Oil price 15-month low in global market, highest in BD
Special Correspondent: Unrest in the banking sector around the world and a possible rise in US interest rates have raised fears of a global recession. As a result, the demand for fuel is also expected to decrease. Due to these concerns, fuel price in the global market reached its lowest level in the last 15 months yesterday (Monday).
Brent crude for May delivery fell 2.8 percent to $70.90 a barrel in volatile markets yesterday. The US West Texas Intermediate (WTI) April crude oil price also fell by $1.88. As a result, the price of this oil decreased to 64.86 dollars per barrel.
However, fuel oil price in Bangladesh is now highest in the world. The government on 5 August 2022 increased fuel oil prices by 42.5% to 51.6%, highest in 20 years. The Energy and Mineral Resources Division hiked Diesel and Kerosene prices by Tk 34 per litre to Tk 114 and Octane and Petrol prices by Tk 46 per litre to Tk 135.
The BD government announced the hike at a time when oil prices in the international market were on a downward trend. Brent crude price on August 5, 2022 was $95.50/barrel.
Yesterday (Monday 20 March, 2023) crude oil price in the international market was $70.90 a barrel. If we covert it into litre price, it will be $70.90/158.987 = $.4459 x Tk 107 = Tk 47.71 or Tk 48. Refining cost Tk 5 per litre will be added. So, the cost stands at Tk 48 + 5= Tk53 per litre. If we add more taka 7 as other operating cost, it will stand Tk 60 per litre.
However, Petrol and Octane is now being sold at Tk 130 per litre, which is more than double than the production cost.
If we look to our neighboring country India, we find thatPetrol price in India opened the month of February standing at the rate of Rs.96.76 per litre, while diesel prices stood at Rs.89.66 per litre. When compared to the closing rates of the previous week, there were no changes in the prices.
The price of petrol closed the month of February while being traded at the rate of Rs.96.76 per litre. Diesel, on the other hand, closed the month standing at the rate of Rs.89.66 per litre. The overall performance of both the fuel witnessed a stability during the month of February in India.
Petrol price in India is Rs.96.76 per litre. If we convert it into Taka, it stands 96.76x BDT 1.28 =BDT123.85. It is Taka 12 more than India.
Brent and WTI prices hit their lowest levels since December 2021 on Monday, British news agency Reuters said. WTI prices fell below $65 per barrel. Both benchmarks Brent and WTI fell as the banking sector crisis deepened.
Oil prices hit record lows after Switzerland’s second-largest bank Credit Suisse reached a historic deal to buy UBS, another major bank. But banking stocks and bonds fell on Monday amid signs that bank investor confidence is fragile.
After the deal was announced, the US Federal Reserve, the European Central Bank and other major central banks pledged to boost market liquidity and support other banks at risk.
National Australia Bank head of commodity research Baden Moore said the market’s focus was now on banking sector volatility and the possibility of a US Federal Reserve rate hike.
The US Federal Reserve Bank is expected to raise interest rates by 25 basis points on March 22, despite recent banking sector turmoil, according to most economists polled by Reuters.
In such a situation, the executives of some banks in different countries of the world have called on the central bank to stop the strict implementation of monetary policy for the time being. However, they advised to be prepared for interest rate hike later.
Meanwhile, a ministerial meeting of the world’s top oil exporters OPEC and its allied producers, known as OPEC Plus, is scheduled to take place on April 3. Earlier, in October, members of the alliance agreed to cut their oil production target by 2 million barrels per day by the end of this year.
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