(This article was originally published on October 11, 2014) /p NEW DELHI: Iran and Saudi Arabia are engaged in a sticker fight with oil prices expected to fall below $90 a barrel on Friday as the global benchmark oil price continues to fall. Expected. This is currently unthinkable.

If the macroeconomic environment improves significantly and international oil prices continue to fall, the government could ease. However, the center will not be in a hurry to relax diesel price controls, but will opt for regular price adjustments to avoid the impact of a future rebound in crude oil prices.

The continued fall in crude oil prices is due to four factors: increased production, fading hopes of an immediate economic recovery despite the turmoil in the eurozone, a lack of appetite in China, and new countries such as Russia and the United States. Countries are eroding traditional suppliers, but supplies from Iraq and Libya remain.

Oil prices have fallen more than 20 percent since last June. On Friday, Brent crude, the global benchmark, tested $88.44 a barrel. Saudi Arabia is discounting more than $1 a barrel as Iran seeks an increasing number of new sources to maintain its traditional market share. Trade at current prices. Consumers. /p Thursday’s average estimate of $90.50 for India’s crude oil purchases reflected losses from Monday through Friday. As an immediate effect, consumers can expect gas prices to fall again next week. After polls in Maharashtra and Haryana, the government plans to conduct 10 polls Diesel prices have been reduced by about Rs 3 liters per month.

The sharp fall in diesel prices will lead to a decline in freight transportation by road and rail. At this time, as winter crops and vegetables start to flow into the market, the prices of rice, pulses and vegetables will fall sharply, which will have a greater impact on consumption levels and inflation is expected to fall. From a macroeconomic point of view, low oil prices reduce the cost of oil imports, thereby reducing foreign exchange outflows. This will ease the current account deficit. Notably, the fuel subsidy burden will also be significantly reduced due to excess diesel recovery. According to the latest statistics, the diesel subsidy is Rs. 2.50 per liter. All this will impact the government’s fiscal deficit, reduce the need for tax increases and have a positive impact on the interest rate regime.

All this could happen without formal diesel deregulation. There will be increasing pressure on private fuel retailers to open up their markets. However, many manufacturers are hopeful that this will help prices rebound as winter demand approaches. It is unclear whether the government will quickly ease diesel regulations or wait for changes in the global oil market.