The price of crude oil is steadily rising in the global market. Amid tensions with Iran, crude oil prices have surpassed $100, causing companies to incur losses on petrol and diesel.
Oil companies are incurring losses due to crude oil prices.
Due to rising tensions in the Middle East, global crude oil prices are steadily rising. Due to this tension, crude oil prices have now surpassed $100 per barrel. This is directly impacting Indian oil companies. Oil companies are incurring losses of ₹5 and ₹23 per liter on petrol and diesel, respectively.
What did the officials say?
According to Money Control, senior ICRA official Prashant Vashisht stated that, based on the average crude oil price so far in September, oil companies' margins on petrol are approximately minus ₹5 and on diesel, they are minus ₹23 per liter. Companies are also incurring a loss of approximately ₹200 per cylinder on domestic LPG cylinders.
If tensions in West Asia persist for a long time, crude oil could become more expensive. This could increase the cost of petrol, diesel, transportation, and energy in India, and could also impact inflation.
Brent crude, the main benchmark for global oil
prices, rose nearly 2.5 percent to reach above $100 per barrel. US WTI crude also rose nearly 2% to around $95. Brent crude crossed the $100 mark for the first time since July 23. This rise in prices is due to rising tensions between the US and Iran and conflict in West Asia.
India is the
third largest importer of crude oil in the world. The country purchases over 88% of its crude oil needs from other countries. Consequently, rising oil prices in the international market increase India's import bill. This threatens to widen the trade deficit and put pressure on the rupee.
It's worth noting that retail prices of petrol and diesel have remained stable for more than three months. The last increase was on May 25th, when petrol was priced at Rs 2.61 and diesel at Rs 2.71 per liter. Following four price hikes in May, petrol became costlier by a total of Rs 7.35 and diesel by Rs 7.53 per liter.
