When Brent hit $98 per barrel, the crude mix that India bought, also known as the Indian Basket, also rose to $93. 6, which marks a $10 increase from 4 November when the Center cut excise tax by Rs 10 on a liter of diesel and Rs 5 on gasoline to ease high oil prices ahead of the poll. state.
Pump prices have remained unchanged since then under unofficial government regulation. The sharp increase has widened the gap between the actual and retail prices of gasoline and diesel, leading to the resilience of retailers. According to ballpark, every dollar increase in the price of crude oil affects the retail rate of 70-80 paise.
The price revision freeze, as seen after previous polls, is expected to be lifted once the final vote is cast on March 7 and retailers will begin raising prices. However, they may not be able to fully restore the past of lack of recovery, which will hamper the profitability of companies such as IndianOil, Hindustan Petroleum and Bharat Petroleum. But on the other hand, high oil prices will boost the profits of domestic producers such as ONGC and Oil India Ltd.
The Ukraine crisis will keep oil going in the coming months to keep fuel prices in focus, unless there is a breakthrough in US-Iran talks that bring Iranian oil to market. But supply will not be a problem as India imports almost no oil from Russia via the western route.
But the Ukraine crisis will also affect Indian gas prices. India meets half of its gas needs through imports using LNG, or liquefied natural gas. Although India hardly imports LNG from Russia, the crisis pushed up fuel prices. This will increase costs for the industry.
Rising fuel costs will increase inflation and possibly spur a tougher monetary policy RBIincrease the cost of living.
