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India Braces for Fuel Price Hike Amid Global Oil Crisis
10 May
Summary
- Oil companies face monthly losses of approximately 30,000 crore.
- Government and OMCs are absorbing up to 24 per litre on petrol.
- Fuel prices may rise by Rs 4-5 per litre, first hike in four years.
Amidst escalating global crude oil prices, India is on the cusp of a significant fuel price revision. Oil Marketing Companies (OMCs) are reportedly facing monthly under-recoveries of approximately Rs 30,000 crore. This financial strain stems from crude oil prices jumping from around USD 70 to USD 126 per barrel due to heightened tensions in West Asia.
Despite the global shock, the Indian government and OMCs have been largely absorbing the cost, with estimates suggesting they cover up to Rs 24 per litre on petrol. This period of stable fuel prices, which has lasted for nearly four years, is now under pressure.
A potential hike of Rs 4-5 per litre for petrol and diesel is anticipated if approved by the central government. Additionally, LPG cylinder prices might see an increase of Rs 40-50. To ensure fuel supply, India has diversified its crude oil imports, sourcing more from Russia, the US, and West Africa, while refineries are instructed to operate at full capacity.
The government is closely monitoring the West Asian situation and its impact on global energy markets. This proactive diversification of imports aims to mitigate risks associated with supply disruptions and shipping concerns in the crucial Strait of Hormuz. The situation highlights the delicate balance India is maintaining to ensure energy security.
