NEW DELHI: The ongoing conflict between Iran and Israel has started taking a toll on crude prices in the international market, with oil crossing USD 100 a barrel for the first time in four years.
However, US President Donald Trump claimed the price surge is temporary and will come down. In a social media post, Trump said the rise in oil prices is short-term and will drop once the destruction of the Iran nuclear threat is over.
“Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A., and World, Safety and Peace,” Trump said in a social media post. “ONLY FOOLS WOULD THINK DIFFERENTLY.”
Brent crude oil climbed 25% to around USD 115.8 per barrel at 11 AM IST, while US WTI was trading at USD 113.8 a barrel, up by USD 22.85 or 25.14%. The surge comes after US crude prices jumped 36% and Brent crude rose 28% last week.
The sharp rise in crude prices is due to major oil suppliers halting production after their facilities were hit by missiles or rockets. In addition, closure of the Strait of Hormuz, a key waterway for global crude supply, have added to market fears. About 15 million barrels of crude oil, roughly 20% of the global supply, normally pass through the Strait of Hormuz every day.
The last time crude crossed USD 100 per barrel was in late February 2022 following Russia’s invasion of Ukraine. Brent crude reached an intraday peak of USD 139.13 per barrel on March 7, 2022, while WTI crude hit USD 130.50 per barrel during the same period.
In India, petrol and diesel prices have not been increased so far, with the government claiming that fuel supply remains adequate. However, the government on Saturday raised the prices of domestic and commercial LPG cylinders by Rs 60 and Rs 115 respectively.
According to government sources, state-owned oil marketing companies such as Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) are not expected to increase petrol and diesel prices, as these companies are likely to absorb the losses.
The government said that when crude prices were low in the international market these companies made profits, and when crude prices were high, they would absorb the losses.
“I don’t expect the oil companies will increase the price of petrol and diesel in the country,” said a government official.
The last major nationwide revision in petrol and diesel prices took place on March 15, 2024, when oil companies announced a Rs 2 per litre cut for both fuels.
The official also said that India’s fuel supply situation remains stable as the country has diversified its supply sources beyond the Strait of Hormuz.