Even as the World Bank revised sharply downwards its oil price forecast for 2016 to an average of $37 a barrel -- from $51 predicted in October -- in context of the continuing supply glut and low demand prospects from emerging economies, the Indian basket of crude oils fell to a 14-year low on the last trading day on Tuesday.
"World Bank is lowering its 2016 forecast for crude oil prices to $37 per barrel in its latest Commodity Markets Outlook report from $51 per barrel in its October projections," the multilateral lender said in a release in Washington on Tuesday.
The Indian basket, comprising 73 percent sour-grade Dubai and Oman crudes and the balance in sweet-grade Brent, fell on Tuesday at $26.63 for a barrel of nearly 160 litres, official data showed on Wednesday. It had touched exactly the same monthly price in June 2001.
In this regard, the bank also scaled down its growth forecast for emerging and developing economies to 4 percent in 2016, from an expected 4.6 percent previously, and said the prediction was "subject to considerable downside risks in a fragile global environment".
Explaining that the lower forecast reflects various supply and demand factors, the World Bank said "these include sooner-than-anticipated resumption of exports by Iran, greater resilience in US production due to cost cuts and efficiency gains, a mild winter in the Northern Hemisphere, and weak growth prospects in major emerging market economies".
The bank forecast crude oil prices at $37 a barrel for 2016 by using an average of UK Brent, Dubai and the US West Texas Intermediate (WTI) oil prices, equally weighted.
"Many of the factors underpinning the slowdown in recent years -- including low commodity prices, weak global trade and slow productivity growth -- are expected to persist," the report said.
Besides, deteriorating growth prospects in many emerging economies were eroding their fiscal and monetary policy buffers, it added.
The price of the Organisation of Petroleum Exporting Countries (OPEC) basket of 12 crudes closed on Tuesday at $25.11 a barrel -- marking a 13-year low -- compared to $25.58 on Monday, the organisation's secretariat said.
During early trade on Wednesday, WTI crude was trading down nearly 2 percent at $30.86 a barrel, while Brent crude was down 1.35 percent at $31.37 a barrel.
With OPEC deciding last December against cutting output, traders are betting that the cartel is less likely to cut output now to prevent easy passage of Iranian crude into the market, particularly at a time of tensions between Iran and Saudi Arabia.
In comments posted on the Iranian petroleum ministry's website last week, Deputy Minister Roknoddin Javadi said Iran is determined to regain its market share, which collapsed after the international sanctions were imposed.
He said Iran plans to increase oil production by 500,000 barrels a day.
Meanwhile, the Indian government said in New Delhi on Wednesday that the continued slide in crude prices would enable India to cut its oil import bill by $48.5 billion to $64.22 billion in the current fiscal, which would be 43 percent lower from $112.75 billion in the previous fiscal.
The New Delhi-based Petroleum Planning and Analysis Cell (PPAC) said India's crude oil basket price averaged around $35.68 per barrel during December 2015, as against $42.50 per barrel in the previous month.
PPAC said India's import bill is likely to be $64 billion in the current fiscal, down from $112.75 billion in the last financial year, presuming a price of $40 per barrel and an exchange rate of Rs.65 per US dollar for the remaining three months of this fiscal.
India imported 149.4 million tonnes valued at $52.8 billion during the April-December 2015 period, as against 142.2 million tonnes for $95.8 billion during the corresponding period of the last fiscal.