Petrol-Diesel prices could surge after election results as international prices soar
Russia’s attack on Ukraine has shaken the whole world economy. Crude oil is becoming increasingly expensive due to the fight between the two countries. While international oil prices have dropped from a seven-year high, they are still above $100 a barrel and remain a threat to India’s inflation rate and the current account deficit. However, there are no supply concerns, as the oil route remains open. But consumers will have to shell out more if the oil companies increase the prices of petrol and diesel. At present, there has been no increase in the price of petrol and diesel for more than three months. In view of the elections in Uttar Pradesh and four other states, the prices were stable. Oil prices are expected to rise once the elections are over.
According to a top official, the government is closely monitoring the situation and will take appropriate steps as and when required. Brent crude oil crossed $105 a barrel on Thursday for the first time since August 2014 following Russia’s attack on Ukraine. However, it came down to USD 101 on Friday. At 13:30 it was trading at $101.93 per barrel. One trader said the rise in oil prices was a result of market fears of Russian supplies to Europe and the rest of the world.
Industry sources say the difference between the retail selling price and cost of petrol and diesel is more than Rs 10 per liter, which could push up inflation if passed after the completion of elections next month.
In addition, higher oil prices will widen the current account deficit, as India imports 85 per cent of its oil needs and will have to pay extra because of higher prices. Morgan Stanley said higher oil prices are negative for India, which is the world’s third largest oil importer. Imported oil is converted into products like petrol, diesel and LPG. Africa is the second largest supplier, accounting for about 14 percent of the total supply while North America provides 13.2 percent.
