Brent above $130/bbl as US bans import of Russian oil
Premium- U.S. President Joe Biden on Tuesday announced an immediate ban on Russian oil and other energy imports, while Britain said it would phase out Russian oil imports by the end of 2022.
NEW DELHI : Crude oil prices continued their increase during the early trade on Wednesday as US announced a ban on the import of Russian oil.
U.S. President Joe Biden on Tuesday announced an immediate ban on Russian oil and other energy imports, while Britain said it would phase out Russian oil imports by the end of 2022.
The ban on Russian oil raises fears of supply crunch as the country exports 4-5 million barrels of oil per day, making it the second-largest crude exporter in the world after Saudi Arabia.
Around 8.45 a.m., the May contract of Brent futures on the Intercontinental Exchange was at $130.70 per barrel, higher by 2.13% from its previous close. The April contract of West Texas Intermediate (WTI) on the NYMEX rose 1.69% to $125.79 per barrel.
Crude prices have been spiralling since Russia invaded Ukraine, and touched a multi-year high of $139.13 on Monday.
The rising oil prices come as a cause of concern for India as the country imports 85% of its oil demand. The incessant rise in global crude prices have lifted the Indian energy basket, comprising of Oman, Dubai and Brent crude. It was last recorded at $126.32 per barrel on March 7, according to data from the Petroleum Planning & Analysis Cell of the Ministry of Petroleum and Natural Gas.
Although, the increase in crude oil prices has not been transferred to the consumers so far as the retail fuel prices have been unchanged for the over four months now. market experts believe, with mounting pressure of high oil prices on oil marketing companies, retail fuel prices may be sharply increased going ahead.
On Wednesday, the retail price of petrol was unchanged ₹95.41 a litre, while diesel was sold for ₹86.67 per litre in the national capital.
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Amid concerns that retail fuel prices would increase sharply after the end of the state assembly elections on Monday, Union Minister for Petroleum and Natural Gas Hardeep Singh Puri on Tuesday said that it is for the oil marketing companies to revise retail fuel prices and they would factor in the international prices.
Addressing the media, Puri also said that the government would ensure there is no shortage of crude in the country.
"Oil prices are determined by global prices and there is a war-like situation in one part of the world and oil companies will factor that in, " the minister said.
The incessant rise in crude prices would also impact the current account deficit (CAD) to a great extend given India's import dependence for its energy requirements. An ICRA report recently said that, the CAD is likely to widen by $14-15 billion (0.4% of GDP) for every $10 barrel rise in the average price of the Indian crude basket.
"If the price averages $130/bbl in FY2023, then the CAD will widen to 3.2% of GDP, crossing 3% for the first time in a decade," it said.
Mint had earlier reported that the government is assessing the evolving geopolitical situation and will decide on cutting excise duty on fuels if the current surge in crude price lingers longer than can be absorbed by state-run fuel retailers.
The ICRA report said that if the Centre reinstates the excise duty on petrol and diesel to the pre-pandemic rates, before April 1, 2022, followed by the budgeted rise of ₹2 per litre each on unblended fuel in H2 FY2023, the estimated revenue loss to the Centre in FY2023 would be around ₹90,000 crore.
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