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Indian crude oil basket touches all-time high

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West Asian crisis fuelling crude prices

Oil price situation
The impact of current spurt in global crude oil prices is expected to be seen only in August
The Petroleum Ministry has said that it is closely watching the movement of crude price and a review of petroleum product pricing will happen if the situation warrants

New Delhi , July 17

Impacted by the surge in international crude prices, the Indian crude oil basket touched an all-time high of $73.96 a barrel on Friday, up from $72.75 a barrel on June 13. On Monday too, London Brent crude hit a record intra-day high of $78.18 a barrel as violence raged in West Asia. However, crude prices later retreated in the wake of a report that Israel's offensive in Lebanon could be over within days.

Crude oil fell after four days of gains following a report from Sky News that Israel may stop its attack on Lebanon within days. The network cited unidentified Israeli officers. Oil for August delivery fell as much as 1.86 per cent to $75.60 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 11:23 a.m. in London. Brent crude for September settlement fell 1.62 cents to $75.96 a barrel on the ICE Futures Exchange in London. The details about the Indian basket prices are normally available after a time lag.

Impact on India

Speaking to Business Line on the impact of spiralling crude oil price, Mr S. V. Narasimhan, Director-Finance, Indian Oil Corporation Ltd (IndianOil), said, "We determine prices on fortnightly basis. For the second fortnight of July the revenue loss for the company is expected to be Rs 1,450 crore (excluding the oil bonds and subsidy share by upstream companies) on the four petroleum products — petrol, diesel, kerosene and cooking gas."

As for a review of the oil price situation, he said "next month we will take a view when actual impact of crude oil prices will be seen on our product prices. The impact of current spurt in global crude oil prices will be seen in August."

Indian basket

The Indian basket of crude oil comprises Oman-Dubai sour grade of crude and Brent dated sweet crude in 58:42 ratio. In July so far, the average price of Indian basket of crude oil has been $71.4 a barrel. "We cannot take a position on the basis of volatility seen in the last week, we have to take into account the trends in the coming days on the basis of geo-political situation in West Asia," he said.

Petroleum products

Asked about the impact on prices of the four petroleum products with every dollar a barrel rise, Mr Narasimhan said $1 increase in crude price has Rs 100-Rs 120 crore monthly impact on the four products. The company loses Rs 143 on sale of 14.2 kg domestic cooking gas cylinder, Rs 18 per litre on kerosene, Rs 7.75 a litre on diesel, and Rs 5.50 a litre on petrol.

For every dollar (Rs 46.43 — US $1) increase in crude oil prices, there is a need to raise retail prices of a litre of petrol by 39 paise, diesel by 30 paise, kerosene by 36 paise and cooking gas by 67 paise. India imports about 76 per cent of its crude oil requirements in a year.

The Petroleum Ministry on its part maintained that it was closely watching the movement of crude price and a review of petroleum product pricing will happen if the situation warrants.

Related Stories:
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