With governments across the world escalating lockdowns in their respective countries to stop the global spread of COVID-19 coronavirus outbreak, crude oil prices saw a sharp fall on Monday with crude oil futures declining to Rs 1,800 per barrel levels after opening at Rs 1,905.
This fall has been attributed to the sharp fall in demand outlook for oil in light of the coronavirus pandemic and fight for market share between Saudi Arabia and Russia.
In the futures market, crude oil for April delivery opened at Rs 1,905 and declined from there to a low of Rs 1,741 per barrel on the MCX. During evening trade, the futures were trading at around Rs 1,800 per barrel, down around seven per cent.
For May delivery, the oil futures were trading 5 per cent lower at Rs 1,982 per barrel.
Meanwhile, the government has increased the cap on special additional excise duty to give itself room for a hike in near future to raise some revenue in view of a tight fiscal situation. It increased the cap for petrol to Rs 18 from Rs 10 earlier, and for diesel to Rs 12 from Rs 4.
On March 14, it had increased the excise duty on petrol and diesel by Rs 3 a litre each which had reportedly helped the government collect over Rs 2,000 crore. An additional Re 1 per litre was also levied on both petrol and diesel under the road and infrastructure cess, which would help in generating resources for the development of infrastructure.
The increase in excise duty would, in normal course, result in a hike in petrol and diesel prices. But, most of it is going to be adjusted against the fall in rates that would have necessitated because of the slump in international oil prices.