Crude Oil price jumped past $130 per barrel on Monday, reaching the highest level since 2008, as the threat of a US and European embargo on Russian oil imports, as well as delays in Iranian talks, stoked worries of a fuel supply shortage rocketing crude oil prices 20% in the previous week.
Due to the rising instability in the global economy over the Ukraine conflict and the interruption it has caused to trade and shipping services and stringent sanctions on Russia, Brent crude oil futures spiked to $130.89 per barrel early on Monday, the highest level in more than 14 years.
This is expected to dramatically boost India’s crude oil import duties in the coming weeks. Over three-fourths of India’s oil requirements are imported. Oil prices jumped past $130 per barrel on Monday, reaching the highest level since 2008, as the threat of a US and European embargo on Russian oil imports, as well as delays in Iranian talks, stoked worries of a fuel supply shortage rocketing crude oil prices 20% in the previous week.
NDTV quoted Rahul Kalantri, Vice President Commodities at Mehta Equities over the crude oil price hike as saying, “Crude prices posted their highest weekly gains since the middle of 2020. Brent prices gained 21 per cent, and WTI posted 26 per cent gains. Russia exports 4 million to 5 million barrels of oil daily, making it the second-largest crude exporter in the world after Saudi Arabia. We expect crude oil prices to remain firm amid geo-political tensions and rising demand”.
Since the last review in retail prices of petrol and diesel in India four months ago in November 2021, global crude oil prices have climbed from $80 per barrel to over $130 per barrel today, an increase of over 60%.
The last revision in Petrol-Diesel retail pricing in Delhi occurred on December 1, 2021, when the Delhi Government announced a significant reduction in VAT.
A senior official told NDTV on March 3 that the retail price of petrol and diesel needed to counterbalance the hike in crude oil prices since November 2021 was from Rs.8/litre to Rs.10/litre. The recent spike in crude oil prices has added to the pressure and financial stress on Indian oil corporations.
According to sources, the retail price rise for gasoline and diesel might be mitigated if the government permits further crude oil releases from its oil reserve stock. The third alternative is to lower the excise charge and the VAT.
Even before Russia’s invasion of Ukraine, crude oil prices had been gradually rising.
Brent crude averaged $87.22/bbl in January 2022, up from $74.10/bbl in December 2021 and $54.84/bbl in January 2021, according to figures from the petroleum ministry.
In January 2022, the Indian basket crude price averaged $84.67/bbl, compared to $73.30/bbl in December 2021 and $54.79/bbl in January 2021.
What has more deteriorated the situation is plunge in rupee against USD to a record low on Monday. With currency devaluation expected to exacerbate the import cost in overseas markets.
With the Uttar Pradesh Election getting over today, many on the internet has started speculating massive hike in fuel price in retail also causing people thronging at the petrol stations to get their fill before the inevitable fuel price hike.
Taking dig at the central government, Congress leader Rahul Gandhi tweeted, “Get the petrol tank full immediately. ‘Election offer’ of the Modi government is going to end”.
He further said in another tweet that the Modi led government has no plan for rupees devaluation against US dollar, unemployment & inflation, students stranded in Ukraine and China occupying Indian territory.