India’s crude import bill may increase significantly on oil above $130
Brent crude futures hit $130.89 a barrel early Monday, the highest in more than 14 years, due to rising uncertainty in the global economy over the Ukraine crisis and its disruption in trade and shipping services following sanctions on Russia.
It is set to significantly increase India’s import bill on crude in the coming weeks. India imports more than three-fourths of its oil needs.
Oil prices climbed above $130 on Monday, the highest since 2008, as risks of US and European sanctions on Russian oil imports and delays in Iranian talks kept supplies tight after climbing more than 20% last week apprehension had been raised.
Crude oil prices posted their highest weekly gain since mid-2020. Brent prices rose 21 percent, and WTI rose 26 percent. Russia exports 4 million to 5 million barrels of oil per day This makes it the second largest crude exporter in the world after Saudi Arabia. We expect firm crude oil prices amid geopolitical tensions and rising demand,” said Rahul Kalantri, Vice President Commodities, Mehta Equities. said.
Since the last revision in retail prices of petrol and diesel in India in November four months ago, global crude oil prices have risen from around $80 a barrel on November 4, 2021 to $130 a barrel today, a decline of nearly 60 per cent. is growth. 4, 2021.
The last revision in the retail prices of petrol and diesel in Delhi was on December 1, 2021, when the Delhi government announced a drastic reduction in VAT.
A senior official had told NDTV on March 3 that the price revision in the retail price of petrol and diesel is necessary to offset the increase in crude oil prices from November 2021. 8/Litre to Rs.10/Litre. The rise in crude oil prices in the last three days has added to the pressure and financial burden on Indian oil companies.
Sources said the increase in retail price of petrol and diesel could be curtailed if the government allows additional release of crude oil from its oil reserves. The second option is to reduce excise duty and value added tax.
Crude oil prices have already been rising steadily since the Russian invasion of Ukraine.
According to the Petroleum Ministry data, Brent crude prices averaged $87.22 a barrel during January 2022, as compared to $74.10 a barrel in December 2021 and $54.84 a barrel in January 2021.
The average price of Indian basket crude was $84.67/bbl during January 2022, $73.30/bbl during December 2021 and $54.79/bbl during January 2021.
The rupee’s fall to a record low on Monday hasn’t helped, as a depreciation of the currency is likely to further damage the import bill in international markets.
Global forecasting agency Oxford Economics has warned that higher oil prices and inflation will affect India’s growth outlook.
Oxford Economics said in its latest valuation report last week that “due to Russia’s invasion of Ukraine, and also due to the rise in other commodity prices, global oil prices are now above $100 a barrel by the early stages of H2 2022.” India’s growth is expected to remain relatively low for most of 2022″.
According to India Ratings and Research, “A $5/barrel (bbl) increase in crude oil prices will translate into a $6.6 billion increase in the trade/current account deficit.