Bangladesh hopes to find a remedy to the ongoing fuel crisis as U.S. crude prices settled below $95 a barrel for the first time since April in choppy trading.
U.S. West Texas Intermediate crude (WTI) settled $1.65, or 1.7 percent (pc), lower at $94.70 a barrel, while Brent crude futures fell 66 cents, or 0.6 pc, to $103.20. On March 8, the price of crude oil rose to $119.65.
Market analysts think that if the oil prices in the world market is controlled, the instability of fuel oil prices in the country will be reduced. The price hike proposed by BPC will no longer be necessary.
Bangladesh Petroleum Corporation (BPC) official said that they recommended to the government to increase the price of oil. BPC said in the report sent to the government that they are losing Tk 100 crore every day. However, the government has adopted a cost-saving policy without increasing the prices.
Energy expert Professor Ijaz Hossain told Bangladesh Post “The price of fuel oil in the world market is now downward. I hope that this price will not increase. Rather, it will decrease. However, it is difficult to say accurately. Because there are many international factors behind the price decrease and increase. Still the current situation is undoubtedly good news for us.”
“However, BPC had earlier fixed the price of fuel in the local market according to the crude oil prices at $80 in the international market. For several years, BPC has profited from this very low price in the international market. So even if the price is $100, BPC is not supposed to make a loss. BPC can increase the price only if it goes above $100,” he added.
He said, “The neighboring country India adjusts the price of oil with the international prices. If this policy is adopted in our country, then there will not be so much crisis.”
Oil prices rose slightly in the second week of June in the international market. Then it started to decrease again from the beginning of July.
Energy expert think that the recent visit of US President Joe Biden to Saudi Arabia will play a special role in controlling oil prices. In addition, Russia and Ukraine's agreement with Turkey on UN presence in food supply also shows new hope.
Energy and Mineral Resources sources said that since the government has adopted a cost-effective policy in oil consumption, the talks to raise oil prices have stalled.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid recently said that diesel-based power plants use 10 percent of the fuel. Accordingly, if the annual demand of diesel is 50 lakh tons, the power plants use five lakh tons per year in the country.
Sources said that the major problem of fuel import is that foreign currency is needed to import oil. Banks did not want to pay dollars for oil import LC recently. Later, the matter was resolved with the intervention of the high level of the government.
WTI closed lower for the third straight week, pummelled over the past two sessions after data showed that U.S. gasoline demand had dropped nearly 8pc from a year earlier in the midst of the peak summer driving season, hit by record prices at the pump.
Trading in oil futures has been volatile in recent weeks as traders try to reconcile possibilities of further interest rate hikes that could cut demand against tight supply from the loss of Russian barrels.
Libya's oil production is at more than 800,000 barrels per day (bpd) and will reach 1.2 million bpd by next month. Iraq has the capacity to increase its oil production by 200,000 bpd this year.
U.S. oil rigs, an early indicator of future output, remained steady at 599 this week, according to data from energy services firm Baker Hughes.