India, the world’s third largest oil consumer, depends on imports to meet 85% of its needs.
New Delhi:
International oil prices rose to a seven-year high of $103 a barrel on Thursday after Russia attacked Ukraine, but supply lines to India remained unaffected, a top government official said. demonstrating confidence in an uninterrupted fuel supply even as the conflict escalates.
For consumers, the spike in global oil prices will not have any direct impact as state-owned fuel retailers continue to keep gasoline, diesel and LPG prices unchanged.
“All of our supply lines are open,” the official said. “Our suppliers are in the Middle East, Africa and North America, which are not affected by the conflict, and they continue to supply. oil and gas as usual. That situation is likely to continue even if the conflict escalates.” Prices, however, are a concern because they will cause inflation.
“Retail prices are being held, but eventually they will have to increase at some point,” the official said.
Brent crude rose to $103.78 per barrel, its highest since August 14, 2014 and was at $103.40 at 3 p.m., up $6.71, or 6.93%.
India, the world’s third largest oil consumer, depends on imports to meet 85% of its needs. Imported oil is converted into products such as gasoline, diesel and LPG.
Saudi Arabia, Iraq and other Middle Eastern countries accounted for 63.1% of total imports. Africa is the second largest supplier, accounting for nearly 14% of total supply while North America accounts for 13.2%.
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 normally go through pipelines through Ukraine.
But for India, Russia’s supply accounts for only a very small percentage. While India imports 43,400 bpd of oil from Russia in 2021 (about 1% of its total imports), coal imports from Russia are 1.8 million tons in 2021, representing 1.3% total imported coal. India also buys 2.5 million tonnes of LNG per year from Russia’s Gazprom.
In retaliation for the Russian attack, the US, European Union, UK, Australia, Canada and Japan announced sanctions targeting Russian banks and wealthy individuals while Germany halted the project. Large gas pipeline from Russia.
Energy and other commercial activities are up to now no longer sanctioned.
“Availability is not a concern,” said an official at Indian Oil Corp (IOC), the nation’s largest oil company.
The government official said India is closely monitoring the situation and is in contact with the US and other countries.
While supply at the moment does not appear to be a concern for India, it is the price that is causing concern.
Domestic fuel prices – which are directly related to international oil prices – have not been adjusted for 113 consecutive days.
Prices are expected to be revised on a daily basis but state-owned fuel retailers IOC, BPCL and HPCL have frozen prices earlier than voting on new government elections in Uttar Pradesh, Punjab and three other states have started.
Retail pump interest rates are adjusted at $82-83 per barrel, and they are certain to rise when the election closes next month, industry officials said.
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. These rates correspond to Brent crude’s spike to a peak of $86.40/bbl on October 26, 2021. Brent was $82.74 on November 5, 2021, before starting to fall and touch level of 68.87 USD/barrel in December.
However, prices began to rise after that and have risen 12% in February alone, they said.
Gasoline and diesel prices have in the past frozen before key elections.
There was a 19-day freeze in gasoline and diesel prices ahead of the Karnataka polls in May 2018, despite an increase in international fuel prices by nearly $5 a barrel. However, it wasn’t long before the election was over, oil companies were quick to pass on to customers the desired boost – for 16 consecutive days after May 14, 2018. Gasoline prices increased by Rs 3.8/ liter and diesel increased by Rs 3.38 per liter after the increase. .
Similarly, they stopped adjusting fuel prices almost 14 days before the council elections in Gujarat in December 2017.
These companies have also imposed a price freeze on petrol and diesel from 16 January 2017 to 1 April 2017, when council elections are held in 5 states – Punjab, Goa, Uttarakhand, Uttar Pradesh and Manipur – celebrated.
During the 2019 general election, they moderated the revision by not passing all desired rate increases to consumers, industry sources said. Rates start to increase a day after the final period of voting for the Lok Sabha election ends.
The current 110-day hiatus is the longest since the daily fuel price revision was passed in June 2017. Prior to that, there was an 82-day hiatus in rate revisions from May 17. March 2020 to June 6, 2020.
The 82-day intermittent exchange rate revision in 2020 follows the government’s increase in excise tax on petrol and diesel by Rs 3 per liter per liter to offset the gain arising from a fall in international rates. . The government on 6 May 2020, once again increased the excise tax by Rs 10 per liter for petrol and Rs 13 per liter for diesel.
