Reduction in oil prices if slump continues

Oil importers said that there would be a possibility of reducing oil prices if global crude oil prices continue to slump in the coming months.

New fears over global recession and a rise in production made oil prices slump to a three-month low this week prompting predictions that it will fall below US$ 100 a barrel within weeks.

World oil prices slumped 20 per cent this week after hitting a record high of US$ 147.27 a barrel on July 11 due to renewed fears about the slow down in the US economy.

CPC sources said that if world crude oil prices continue to slump during the next couple of months a price revision will be considered to pass on the benefits to the consumers.

"We cannot reduce prices on fuel immediately since oil prices in the international market have dropped for a few days. The average price of oil during a month is considered in revising prices", the sources said. The CPC imported oil last month when a barrel was US$ 147. A revision could be considered taking into account the prices when the new stock is purchased.

Managing Director, Lanka IOC, K. Ramakrishnan said since the company is losing Rs. 9 on a litre of petrol there would be no price reduction immediately even if world oil prices continue to drop.

Lanka IOC had purchased 26,000 mt of oil when prices hit record highs of US$ 147 a barrel last month. The company will maintain the same prices for some time to cover the loss on petrol.

Oil prices slumped to US$ 119 a barrel in Asian trade on Wednesday due to worries about waning demand amid signs of slowing global economic growth.

The decline in oil prices is attributed to the weakened demand in the US, fears of a US-Iran conflict and the storm in the Gulf of Mexico. LF