Crude oil prices witnessed a slight increase on November 21, 2024, driven by concerns over escalating tensions between Russia and Ukraine. Despite a rise in U.S. crude inventories, geopolitical uncertainties have kept the market on edge. Here’s a detailed explanation of the situation, along with petrol and diesel prices in key Indian cities.
Table of Contents
What’s Happening in the Oil Market?
- Geopolitical Concerns:
Tensions between Russia and Ukraine have intensified, with Ukraine launching attacks using advanced Western weapons. This escalation has prompted Russia to issue warnings about the use of foreign arms targeting its territory. Such geopolitical instability often drives oil prices higher due to fears of supply disruptions. - Crude Price Movements:
Brent crude futures rose by $0.16 (0.2%) to $72.97 per barrel, while U.S. West Texas Intermediate (WTI) crude increased by $0.16 (0.23%) to $68.91 per barrel. - U.S. Crude Inventories:
U.S. crude stocks have risen significantly, which usually exerts downward pressure on prices. However, concerns about the global supply chain due to conflicts have outweighed this factor, keeping prices buoyant.
Impact on Petrol and Diesel Prices in India
Oil prices directly affect fuel costs in India, as the country heavily depends on imports. Here are the petrol and diesel prices in some key cities on November 21:
- Chennai: Petrol: ₹102.63/liter, Diesel: ₹94.24/liter
- Gurgaon: Petrol: ₹97.81/liter, Diesel: ₹90.05/liter
- Lucknow: Petrol: ₹96.57/liter, Diesel: ₹89.76/liter
- Nashik: Petrol: ₹105.15/liter, Diesel: ₹92.90/liter
Fuel prices are revised daily, reflecting global crude rates, currency fluctuations, and local taxes.
Why Crude Oil Prices Fluctuate?
- Geopolitical Events: Wars, conflicts, and diplomatic tensions often lead to fears of disrupted supply, pushing prices higher.
- Supply and Demand: A rise in inventories or reduced demand can pull prices down, while increased consumption or supply shortages drive them up.
- Currency Strength: Crude is traded in dollars; thus, a weaker dollar makes oil cheaper for other currencies, influencing global demand.
- Market Speculations: Investors often react to news, driving short-term volatility in oil prices.
Expert Opinions on Crude Oil Trends
Rahul Kalantri, VP of Commodities at Mehta Equities, highlighted the volatility in crude oil prices. He pointed out that escalating geopolitical tensions and potential economic measures from China could support prices. He noted critical resistance levels for crude oil at $69.65–$70.25 and support at $68.10–$68.55.
In rupee terms, crude oil is supported at ₹5,770–5,700, with resistance at ₹5,890–5,940.
My Opinion
The ongoing Russia-Ukraine conflict is a stark reminder of how global geopolitics can disrupt energy markets. While rising crude prices can burden consumers, they also underline the importance of reducing dependency on imported fuels. India must continue to invest in renewable energy, diversify its oil imports, and promote fuel-efficient practices.
Conclusion
Crude oil prices are influenced by a delicate balance of geopolitical events, supply-demand dynamics, and market sentiment. The recent escalation between Russia and Ukraine has highlighted the market’s vulnerability to external shocks. While the immediate impact is seen in higher petrol and diesel rates, the situation calls for long-term strategies to mitigate such risks and stabilize energy costs for consumers.
