The past two weeks have seen a dip in crude oil prices; if they continue to decline this week, it would be the third weekly decline and the longest streak of declines this year. The main cause of the decline has been concerns that a worldwide recession may reduce demand for fuel.
Digital Desk: Following the
owner of the largest refining complex in the world posted a lower-than-expected
profit. Reliance Industries Ltd. issued a warning that a global recession could
harm oil refining margins and hinted at potential future suffering.
In
a post-earnings call on Friday, Reliance's Joint Chief Financial Officer V.
Srikanth stated that "recession fears are dominating oil market
fundamentals, resulting in lower prices and margins."
While
the windfall profits for oil refiners like Reliance have received a lot of
attention, he continued, there are also a number of challenges, including
greater operating costs caused by rising freight and input prices. The cost of
raw materials rose by 76% in the three months ending in June.
In
its upcoming update later this month, the International Monetary Fund (IMF)
will "significantly" lower its forecast for global economic growth,
according to Ceyla Pazarbasioglu, the director for strategy, policy, and
review. It is becoming "far more tough," she warned, due to rising
food and energy prices, slower capital flows to emerging markets, the ongoing
epidemic, and a downturn in China.
The
past two weeks have seen a dip in crude oil prices; if they continue to decline
this week, it would be the third weekly decline and the longest streak of
declines this year. The main cause of the decline has been concerns that a
worldwide recession may reduce demand for fuel.
Reliance's
refining sector has recently experienced growth as a result of its acquisition
of cheaper Russian oil that western consumers avoided due to the ongoing
conflict in Ukraine. At that time, it was exporting at a premium and making a
sizable profit. Now, that advantage is waning.
India
imposed a levy on gasoline exports and crude oil output on July 1 in an effort
to capture windfall profits from rising prices, but this week it was reduced.
According to Srikanth, this tax will lower the nation's gasoline exports.
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