Why fuel prices are increasing throughout the world?

As we all know fuel prices in India have been burning hole in the pocket of Indians, we as a country are not the only ones facing this crisis. Some of the developed countries have seen a high rise in the prices of gasoline. One of the biggest reasons has been the rise in the prices of crude oil in the international market. OPEC+(Oil Producing Exporting countries) which produces around 40% crude oil throughout the world and its exports represent about 60% of the trade internationally have played a big part in the surge of oil prices throughout the globe.

During the pandemic, the prices of crude oil in the international market was stalling around 34$ per barrel due to the decrease in demand for oil due to the lockdown imposed throughout the world due to the pandemic. Due to the decrease in demand for oil OPEC+ countries had already slowed down the production of crude oil and once the countries throughout the globe started to remove the lockdown the demand of the oil increased the OPEC+ countries refused to increase the production of the oil which skyrocketed the demand of oil and which in turn increased the price of the oil per barrel throughout the globe. Today the price of a barrel of crude oil costs around 81$, which has been the highest since 2014.

In Many European countries and Asian countries and cities, petrol and diesel have seen an unprecedented increase in prices. The prices of oil again lead to inflation which governments of all the countries throughout the globe are trying to subdue as much as they can. India, which levies high taxes on gasoline products had recently decreased the tax, especially on diesel to decrease the inflation throughout the country as most of the transport trucks run on diesel.

Recently, OPEC+ countries had a meeting and decided to keep the production of oil low despite the international pressure. Russian Deputy Prime Minister Alexander Novak said “Previously, was planned to raise oil output by 400,000 barrels per month starting from August until the end of October 2022. Today, we have agreed to maintain these amounts in December as well. We understand that the market is recovering, so an additional 2 million barrels was supplied to the market between August and December”  He further added,We are observing a general global economic recovery, which serves as a positive factor. Increasing mobility and business activity are having an additional effect on the growing demand. However, we saw a slump in demand for petroleum products in the European Union in October. Global demand is still under pressure in major consumer regions, while restrictive measures remain in effect in some countries. Yet, we can observe an increase in reserves in a number of states”

The prices of crude oil will increase or decrease remains to be seen. The Covid-19 cases are increasing in most of the European countries and Central Asia another lockdown might slump the demand of the oil and gases which OPEC+ are wary about. But as the things stand, the price of oil and gases will bother a lot of countries and their citizens and it will increase the rate of inflation in many countries.

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