NEW DELHI: Brent crude prices in the international market can hit $150 if Russian Energy exports come to a halt, a recent JP Morgan report said. The report released on Wednesday also noted that the fuel prices in India may be hiked to bridge the Rs 9 a litre gap created by international oil prices soaring past $100 a barrel.
“With state elections getting over next week, we expect daily fuel price hikes to restart across both gasoline and diesel,” JP Morgan said in a report. The seventh and final phase of polling for the Uttar Pradesh legislative assembly is on February 7 and the counting of votes slated for March 10. The oil price in the International market on Wednesday touched $110 a barrel for the first time since 2014. Similarly, the West Texas Intermediate (WTI) rose 6.33% to $109.74 per barrel.
There is fear that the ongoing tussle between Ukraine and Russia or retaliatory western sanctions may disrupt the supply. “We estimate that at spot Brent (~$105/bbl) and Diesel prices, the Oil Marketing Companies (OMCs) are losing Rs 5.7/ltr v/s normalized margins of Rs 2.5/ltr,” it said in a report. “We would caution investors that given the volatility in crude, diesel and forex, these numbers are dynamic and could change from day to day,” JP Morgan said.
As per the Petroleum Planning and Analysis Cell (PPAC), the basket of crude oil India buys rose above $102 per barrel on March 1, the highest since August 2014. This compares to an average of $81.5 per barrel price of the Indian basket of crude oil at the time of freezing of petrol and diesel prices in November 2021. The JP Morgan report also forecasted that the crude oil can rise to $150 per barrel in case of completely shutting Russian oil supply.
However, if the sanctions spared energy transactions but were intensified in other areas, it is believed that crude prices would rise to average$110 in 2Q22 (April-June) with prices spiking to $120 a barrel in the interim as markets priced retaliatory measures by Russia, such as curtailing oil supply. “To summarise, in the event of completely shutting Russian oil supply (that is partially offset by a resumption of Iran exports and the use of strategic oil reserves), crude oil was forecasted to rise to USD 150 per barrel,” reads the report.