Petrol-Diesel Price / Russia-Ukraine war increases oil crisis, will India be able to bear the price pressure?

Zoom News : Mar 19, 2024, 08:20 AM

Petrol-Diesel Price: The conflict between Russia and Ukraine seems to be increasing. Ukraine has launched a major attack on Russia's energy infrastructure. Due to which a huge increase in the prices of crude oil was seen on Monday. Oil from Gulf countries crossed $87 and reached a four-month high. According to experts, crude oil prices may cross $90. On the other hand, tension in the Middle East also seems to be a major reason. Apart from this, due to increasing demand due to economic growth in China and America, there may be a further increase in the price of crude oil. Earlier, Iraq and Saudi Arabia have extended their supply and production cut till June. Due to which the prices of crude oil seem to be getting a lot of support.

Now the biggest question that has arisen is whether the countries which are having elections in the current year, especially those countries which are dependent on crude oil imports, will they be able to digest this inflation? Yes, our signal is more towards India. General elections are going to be held in the country in the next few weeks. From the kind of situation seen in the international market, it can be clearly estimated that the price of crude oil can cross $90 per barrel. In such a situation, not only will the country's import bill increase, there will also be a decline in the rupee against the dollar. Also, the prices of petrol and diesel can also be increased immediately after the elections.

Recently, the Central Government has tried to provide relief to the common people by reducing the price of petrol and diesel by a nominal amount of Rs 2. This cut has been made by the oil marketing companies. OMC has changed the prices of petrol and diesel after almost two years. Whereas the last increase in the prices of petrol and diesel in the country has been seen after May 2022. At that time, the Finance Minister of the country had tried to provide relief in the prices of petrol and diesel by reducing the central tax on petrol and diesel. Let us also tell you at what level the prices of crude oil have reached in the international market at present. Also, what will be the price of petrol and diesel in the four metros of the country?

Crude oil prices at four month high

Oil prices rose nearly 2 per cent to a four-month high on Monday amid a decline in crude exports from Iraq and Saudi Arabia, strong demand and economic growth in China and the US and escalating conflict between Ukraine and Russia. . On Friday, crude oil prices crossed $87 per barrel. According to Reuters report, Brent futures of crude oil from Gulf countries increased by $ 1.55 or 1.8 percent and closed at $ 86.89 per barrel.

While American crude oil US West Texas Intermediate crude increased by $ 1.68 or 2.1 percent and closed at $ 82.72 per barrel. Brent closed at its highest level since October 31 and WTI closed at its highest level since October 27. In other energy markets, US gasoline futures closed at their highest level since August 31.

Less from Iraq and Saudi

Iraq, OPEC's second-largest producer, said it would reduce crude oil exports by 3.3 million barrels per day (bpd) in the coming months to compensate for exceeding its OPEC Plus quota since January. This means that shipments from Iraq will be reduced by 130,000 bpd compared to last month. In January and February, Iraq pumped significantly more oil than its January production target. In Saudi Arabia, OPEC's biggest producer, crude oil exports fell for the second consecutive month to 6.297 million bpd in January from 6.308 million bpd in December.

Russian refineries attacked

Meanwhile, according to Reuters analysis, refining capacity in Russia has declined by about 7 percent in the first quarter due to Ukrainian attacks. Market participants say the refinery closure will push Russia to increase oil exports through its western ports from about 200,000 bpd to about 2.15 million bpd in March. Meanwhile, oil production from top shale-producing fields in the US will rise to the highest level in four months in April.

Demand from China and America

In China, the world's largest oil importer, factory output and retail sales in the January-February period beat expectations, providing a solid start to 2024. On the other hand, there seems to be pressure on the property market. Analysts at energy consultancy firm Gelber & Associates said in a note that crude oil is up today. Demand for crude oil from China is its biggest factor.

In the world's largest economy, the US Federal Reserve (Fed) may announce a freeze in interest rates during its policy meeting on Wednesday. Stronger-than-expected US economic growth and stable inflation this year have led investors to push expectations of the Fed's first rate cut to June instead of May and how many cuts are likely this year. Lower interest rates will reduce the cost of purchasing goods and services, which could boost economic growth and increase demand for oil.

Price freeze for the fourth consecutive day

After reducing the price of petrol by Rs 2 per liter, OMC has again pressed the freeze mode button. This is the fourth consecutive day when the prices of petrol and diesel are being seen stable in all four metros and major cities of the country. Government oil companies had cut the prices of petrol and diesel on March 15. This change from the companies was seen for the first time after April 2022. Whereas in May 2022, the government had definitely tried to provide some relief by reducing the central tax.

But there was no change for about two years. The special thing is that if we look at the figures of the first 9 months of the current financial year, the three government oil companies of the country had made a profit of more than Rs 69 thousand crores. Experts believe that this profit can increase from Rs 85 thousand crore to Rs 90 thousand crore in the entire financial year. Till date, government oil companies have never made such a huge profit in any financial year.

Petrol and diesel prices in major cities of the country