New Delhi: After having dropped below the psychological $50-a-barrel-mark earlier in the week, the Indian basket of crude oils closed below $49 on its last trading on the eve of Independence Day.
State-run Indian Oil Corp followed with an independence day gift, cutting prices of petrol by Rs.1.27 a litre and of diesel by Rs.1.17, both at Delhi with corresponding reduction in other states.
"Since last price change (August 1), there has been a decrease in international prices of both petrol and diesel," IOC said.
It was the second time this year that oil was breaching the $50-mark, from levels above $100 last year.
The basket of 12 crude oils of the Organisation of Petroleum Exporting Countries (OPEC) closed at $46.62 for a barrel of nearly 160 litres on Friday, compared to $47.28 on Thursday.
Oil prices dived as crude output from the OPEC increased in July.
In July, OPEC crude production increased by 101,000 barrels per day to average 31.51 million barrels per day, according to OPEC's monthly oil market report last week.
Non-OPEC oil supply is expected to grow by 960,000 barrels in 2015, following an upward revision of 900,000 barrels, due to higher-than-expected output from non-OPEC producers mainly outside of North America.
OPEC maintained its output quota of 30 million barrels per day at June's meeting. The cartel's output accounted for around 40 percent of the global crude output.
Algerian Energy Minister Salah Khebri said last that OPEC has no plans for an emergency meeting to discuss the drop in oil prices before the next scheduled gathering in December.
Particularly since global powers signed the historic nuclear deal with Iran last month, traders have been worried that crude supply might exceed the demand.
The global oversupply is currently running at two million barrels a day, compared to 1.8 million during the first six months of the year, American investment firm Goldman Sachs said in a report earlier this month.
According to an Indian energy expert, by keeping production high, OPEC is pushing down prices, which will drive away new investments and eventually keep future oil and gas production down in the long-term.
"It is a continuation of a trend that has already started with global hydrocarbon majors such as ExxonMobil, BP, Shell, ConocoPhillips and Gazprom, among others, cutting down spending on exploration," said Amit Bhandari, a fellow at Mumbai-based foreign policy think-tank Gateway House.
A fallout of lower crude prices comes from the United Arab Emirates last month, with a deregulation of petrol and diesel prices, resulting in an increase by 24 percent in the rice of petrol to $0.58 per litre.
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.
The Indian basket, made up of 73 percent "sour" grade crude from Oman and Dubai and the balance by "sweet" grade Brent, fell to its lowest of $46.59 in January, provoking the Reserve Bank of India to make the first of its interest rate cuts this year after almost two years.
The importance of Prime Minister Narendra Modi's ongoing visit to the UAE, the first after Indira Gandhi in 1981, can be guaged from the Gulf nation's place in India's energy security as the sixth largest import source of crude oil for India in 2014-15.