Fuel consumers may get some respite from rising prices of petrol and diesel as global oil scenario is expected to soften down in the coming days with oil cartel OPEC reaching an agreement to raise production to meet the growing demand.
The increase in Covid cases globally have made the oil market uncertain as it has the potential to erode demand quickly.
The benchmark Brent crude declined by 3 per cent to settle at around $73 a barrel, while US crude has fallen by about 4 per cent to settle at about $71 a barrel.
The fall this month has come after crude fell in the previous eight months as the global economy recovered from the pandemic.
Sources said after differences between Saudi Arabia and the UAE put off a deal at OPEC on production cuts earlier, it is becoming increasingly clear that OPEC+ is nearing a deal that would give it better terms and allow the cartel to boost output in the coming months.
Already OPEC output in June increased by 590,000 bpd to 26.03 million bpd. In July, the output has increased further and may increase again next month.
If this happens and cases of variant of Covid continues to rise globally, there could be added pressure on oil that can see a fall from current levels in coming months.
With the evolving situation, analysts expect oil prices to fall below $70 barrel soon. At intercontinental exchange benchmark Brent crude is currently hovering at $73.59 a barrel.
“The situation in global oil markets looks favourable for a oil price fall in coming days. This would be positive for India that can not only reduce its rising import bill but also keep increasing fuel prices under check,” said an oil sector expert not willing to be named.