Gasoline and diesel prices may increase after more than 4 months and remain stable
New Delhi:
Gasoline and diesel prices are likely to rise this week as oil companies prepare to offset accumulated losses from holding rates steady for more than four months ahead of council elections in five states, including including Uttar Pradesh, despite soaring international oil prices. The 13-year high was $140 per barrel.
Industry sources say fuel prices need to be raised by Rs 15 per liter for fuel retailers to break even.
West Texas Intermediate crude futures, the US benchmark, rose to $130.50 a barrel on Sunday night, the highest since July 2008, before retreating. The international benchmark, Brent crude, hit a high of $139.13 at one point overnight, also the highest since July 2008.
To combine things, the rupee fell to a record low of 77.01 per dollar on Monday.
India depends on overseas purchases to meet about 85% of its oil needs, making it one of the most vulnerable countries in Asia to higher oil prices.
The double hit of oil prices, which have surged more than 60% this year, and a weakening rupee could hurt the nation’s finances, dent a nascent economic recovery and boost inflation.
From 2017, fuel prices will be adjusted daily in line with benchmark international rates for the previous 15 days. But the rate has been frozen since November 4, 2021.
The basket of crude oil that India buys rose above $111 a barrel on March 1, according to information from the Petroleum Planning and Analysis Authority (PPAC) of the Ministry of Oil.
This compares to the average price of $81.5 per barrel of Indian crude oil at the time when gasoline and diesel prices froze four months ago.
With the final phase of the poll ending on Monday, the government is now expected to allow state-owned fuel retailers to return to work, an industry official said. daily price adjustment”.
But the oil companies are not expected to roll over all of their losses overnight, and they will moderate it – raising interest rates below 50 pounds per liter per day.
International oil prices have surged since Russia sent its forces to the Ukrainian border last month. They spiked after it invaded the Central Asian nation over fears that oil and gas supplies from the Russian energy giant could be disrupted, either by conflict in Ukraine or retaliatory sanctions by Russia. The West.
While Western sanctions have so far stymied energy trade, the prospect of an outright embargo on Russian oil and products is leading to the latest rally in international oil prices.
Ratings agency ICRA in a report said it expected India’s current account deficit to widen to 3.2% of GDP by 2022-23 if crude oil prices average $130 per barrel, the second time. first to surpass 3% in a decade.
“We expect the dollar-rupee cross to trade in the range of 76.0-79.0 per dollar until the conflict subsides,” it said.
The current account (CAD) deficit is likely to grow by $14-15 billion (0.4% of GDP) for each increase in the average price of a basket of Indian crude at $10/barrel.
Russia accounts for a third of Europe’s natural gas and about 10% of global oil production. About a third of Russia’s gas supplies to Europe usually go through pipelines through Ukraine.
While supply at the moment does not appear to be a concern for India, it is the price that is causing concern.
Petrol costs Rs 95.41 per liter in Delhi and diesel costs Rs 86.67. This price is after taking into account the Delhi government’s reduction of excise tax and VAT rate reduction.
Before these tax cuts, the price of petrol had hit an all-time high of Rs 110.04 per liter and diesel of Rs 98.42.
