NEW DELHI: Even as the retail fuel prices in India have been unchanged since more than three months, oil price in the international market is soon to touch USD 100 per barrel. In the domestic market, the price of fuel has not been revised for a record 110 days. Many believe the hike is imminent once elections in the five states get over.
As per norms, every one dollar increase in crude prices leads to about an increase of 50 paise-60 paise per litre in retail fuel prices in India. “Any change in the prices of fuels in the international market is definitely going to have a direct or indirect impact on domestic markets,” said Gaurav Moda, India Energy Leader, EY.
On Tuesday, the Brent Crude Futures was trading at USD 99.38 per barrel, the highest since 2014. Similarly, West Texas Intermediate (WTI) rose by 4.8% to USD 95.47. Analysts believe the stand-off between Russia and the West over Ukraine will further hike the oil prices in the international market in the coming days.
“International Brent Crude prices rose on Monday as the stand-off between Russia and the West over Ukraine escalated, adding to supply concerns. Domestic crude oil and Energy Index futures also ended higher tracking overseas prices. Tension escalated further after the Kremlin announced Putin would sign a declaration recognising two breakaway regions in eastern Ukraine as an independent. The EU warned it would consider sanctions if the regions are recognised as independent,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.
The oil-producing countries also refused to pump more fuels to ease the pressure on prices. Last week, OPEC+ said it would stick to its current agreement to add 400,000 barrels per day of oil output each month.
In November, India and the US announced the release of 5 million barrels of crude from their strategic reserves to help cool the global price. However, it failed to give the desired results due to unabated price hikes. The fuel price has gone up more than 30% between Dec 2021 and Feb 2022. Petrol costs Rs 95.41 a litre in Delhi, and diesel is priced at Rs 86.67.
India’s fuel demand to grow 5.5% next fiscal
India’s fuel demand is likely to grow 5.5% in the fiscal year beginning April 1 as economic activity picks up after devastation caused by the pandemic, government estimates showed on Tuesday. Fuel consumption in 2022-23 is estimated to rise to 214.5 million tonnes from 203.2 million tonnes expected sales in the current fiscal year ending March 2022, according to the oil ministry’s Petroleum Planning and Analysis Cell (PPAC). It will cross the pre-pandemic level sales in the current fiscal. Demand for petroleum products grew by 4.9% in the first nine months of the current fiscal year. Fuel consumption was 148.3 million tonnes in April-December 2021. India consumed 194.3 million tonnes of petroleum produced in 2020-21 - the year that saw a pandemic-related lockdown crippling economy and mobility.
