As predicted by many, the Russia Ukraine war coupled with appreciating global demand has lead the fuel prices to rise upto USD 95 – USD 125 per barrel. Caught between the ripples of this major spike, commercial fuels in India may see a push of Rs. 15 – Rs. 22 per litre. It is being said that the Oil Mining Corporation (OMC) will revise the prices on or after 7th March, once the voting for state assembly elections concludes. India imports 85% of its crude oil needs.
A spike in the domestic fuel prices are bound to have a widespread inflationary effect, while on the other hand, the consumer price index has already crossed RBI’s threshold level. As per industry calculations, a 10 per cent rise in crude oil prices adds nearly about 10 basis points in CPI inflation.
The fear of lower supplies with sanctions on Russia has weighed on upcoming supply from Iran. Crude oil prices may keep form trading range next week capping upside at USD 130 and support at USD 95 per barrel. The higher oil prices has raised market expectations that Government of India may hike fuel prices post UP elections, expecting rise by Rs 10-15 per litre.”Tapan Patel, Senior Analyst (Commodities), HDFC Securities
Russia is the third largest producer of crude oil in the world and the ongoing geo-political conditions have put the Brent crude oil price to a 10 year high of USD 119.84 per barrel. It is feared that the sanctions against oil producer will curtail global supplies.