Home / Markets / Commodities /  Centre deregulates domestic crude oil market to boost revenues

In a bid to remove market anomaly, boost tax revenues and help domestic crude oil manufacturing companies to get better prices for crude, the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, on Wednesday approved deregulation of sale of domestically-produced crude oil in its meeting conducted through video conferencing.

The development was announced by Union Minister Anurag Thakur after the Cabinet meeting. Thakur said the decision will be implemented from October this year. 

With this, the companies can sell their crude oil to any private company in the domestic market along with government companies.

This comes against a backdrop of India producing historically low amounts of crude oil in decades.

India's domestic crude production has been on a consistent decline. In FY22, the production slipped to 28.4 MMT, the lowest in over two decades. The production in 2021-22 represented a decline of 11.8% from 32.2 MT in FY95, increasing the economy's vulnerability due to skyrocketing global oil prices.

Despite being the third-largest consumer of oil, the nation depends on imports to meet 85% of its needs.

In FY22, the country's crude oil import bill ballooned to $120.4 billion as the crude prices surged.

High reliance on imports has inflated India’' crude import bill and widened the trade deficit. State-owned ONGC, which accounts for a bulk of domestic crude production, has seen its output decreasing steadily.

Meanwhile, crude oil prices on Wednesday rose by 30 to 8,842 per barrel as participants widened positions on a firm spot demand.

On the Multi Commodity Exchange, crude oil for July delivery traded higher by 30 or 0.34% at 8,842 per barrel in 7,722 lots.

Analysts said the raising of bets by participants kept crude oil prices higher in futures trade.

Globally, West Texas Intermediate crude oil was down by 0.11% at $111.64 per barrel, and Brent crude traded 0.25% lower at $117.68 per barrel in New York.

ABOUT THE AUTHOR

Meghna Sen

Meghna Sen is a deputy chief content producer at Livemint where she tracks companies, news, markets. She has 5+ years of experience with print and online publications. Email: meghna.sen@htdigital.in
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