New Delhi, July 29 (IANS): With global oil prices again heading south towards $50 per barrel in a repeat of the early 2015 plunge from over $100, the Indian basket of crude oil traded on Tuesday at $52.93 for a barrel of nearly 160 litres.
Brent crude for September delivery decreased 17 cents to close at $53.3 a barrel on the London ICE Future Exchange.
The basket of 12 crude oils of the Organisation of Petroleum Exporting Countries (OPEC) closed at $50.54 a barrel on Tuesday.
The slide this time comes in the wake of the Iran nuclear agreement earlier this month which raised anticipation of supplies from the country.
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 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 (bpd) in June, an increase of more than 200,000 bpd on the previous month.
Citing the recent twin developments of US firm ConocoPhillips halting talks about on developing a shale gas block in China and the country cutting its 2020 shale gas production target to a third of the original number, an Indian energy expert said both these indicate that OPEC's refusal to cut oil production has finally achieved its goal of discouraging the development of potential oil and gas resources.
"By keeping production high, they (OPEC) can push down prices, which will drive away new investments in oil and gas production, and eventually keep future oil and gas production down in the long term," said Amit Bhandari, fellow at Mumbai-based foreign policy think tank Gateway House.
"It is a continuation of a trend that has already started with global hydrocarbon majors such as ExxonMobil, BP, Shell, ConocoPhillips, Gazprom, among others, cutting down spending on exploration," he said.
Though low prices in the short-term are welcome, there is a flip side too for oil producers like Cairn India, which reported a 24 percent drop in net profit for the first quarter ended June, caused by the fall in crude prices.
"Oil and gas fields across the world, and the companies which own them, have lost value and can be bought cheap because of low oil prices," Bhandari said.
"Indian companies need to actively pursue this path and focus on acquiring oil fields and oil companies abroad in order to secure a stable and predictable supply of oil in the medium- and long-term as well," he added.