New Delhi, July 28 (IANS): International oil prices have again begun heading south towards the $50 per barrel mark -- this time in the wake of the Iran nuclear agreement earlier this month which raised anticipation of supplies from the country.
The basket of 12 crude oils of the Organisation of Petroleum Exporting Countries (OPEC) closed at $51.29 a barrel on Monday. The Indian basket of crude oil traded on Monday at $53.71 for a barrel of nearly 160 litres.
It had fallen earlier this month to $56 a barrel from above $100 at the beginning of this year, as China's stock market plunged and the Greek crisis revived the spectre of weaker economic growth that could impact oil demand.
The West Texas Intermediate for September delivery moved down 74 cents to settle at $48.45 a barrel on the New York Mercantile Exchange, while Brent crude for September delivery decreased 73 cents to close at $55.27 a barrel on the London ICE Future Exchange.
Traders were also worried that more Iran crude would flow to the already well-supplied oil market.
Mid-month US crude supplies added 2.5 million barrels to the inventory of 463.89 million, according to the weekly report of its Energy Information Administration (EIA).
The International Energy Agency has said that Iran has at least 17 million barrels of crude oil stored and ready to be shipped.
This would add to the output from the OPEC whose production levels are already at a three-year high, at a time when the market remains over-supplied.
Saudi Arabia reported a record crude oil production of 10.6 million barrels per day in June, an increase of more than 200,000 barrels per day (bpd) on the previous month.
Stable crude oil prices in the international markets would help India manage its macro-economy well, chief economic advisor Arvind Subramanian has said.
"I do not see oil prices going beyond $80-85 a barrel, given the fundamental changes in the market. If oil prices remain steady even at that level, I think we can manage the economy well," Subramanian said at a lecture at the Bangalore International Centre.
"Besides decline in our oil import bill, we have seen fundamental shifts in the international market, which has helped crude oil prices remain steady," he said.
But there is a flip side to this for oil producers like Cairn India, which reported a 24 percent drop in its net profit for the first quarter ended June, caused by the drop in crude oil prices.