2 hrs ago
Oil Tops $100, Threatening India’s Import Bill and Finances
Oil became much more expensive for India to buy from other countries.
India’s crude oil basket crossed $100 per barrel.
This happened after tensions between Iran and the United States increased.
Ships carrying oil may face delays because routes near the Strait of Hormuz have become riskier.
India has some alternative suppliers, including Russia, Brazil, and African countries.
Oil companies may lose money if fuel prices remain unchanged while their costs rise.
CNG prices have already increased in parts of Delhi-NCR and Mumbai.
If oil stays expensive, India may spend much more on imports and have a larger trade gap.
India’s crude oil basket reached $101.07 per barrel on September 4.
Higher crude prices could push India’s current account deficit to 1.7% of GDP, or about $71 billion, in FY27.
Oil marketing companies are facing under-recoveries on petrol and diesel, while LPG under-recoveries could rise from Rs 200 per cylinder.
CNG prices increased by Rs 3.89 per kg in Delhi-NCR and Rs 2 per kg in Mumbai.
Attacks and traffic disruptions around the Strait of Hormuz have raised concerns about West Asian oil supplies.
- Who
- India, its oil marketing companies, city gas distributors, and overseas oil suppliers are affected.
- What
- India’s crude oil basket crossed $100 per barrel, raising fuel costs, supply concerns, and the projected import bill.
- Where
- The effects are being felt in India, while supply risks center on West Asia and the Strait of Hormuz.
- When
- The crude basket stood at $101.07 per barrel on September 4; the potential deficit estimate concerns a significant part of the second half of FY27.
- Why
- Renewed tensions between Iran and the United States have increased crude prices and threatened oil shipping routes.
Key facts
- Indian crude basket
- $101.07 per barrel as of September 4
- Potential current account deficit
- 1.7% of GDP, or about $71 billion, if crude stays above $90 per barrel for a significant part of H2 FY27
- Brent crude
- Around $97 per barrel
- Delhi-NCR CNG increase
- Rs 3.89 per kg by Indraprastha Gas Limited
- Mumbai-region CNG increase
- Rs 2 per kg by Mahanagar Gas Limited
- LPG under-recovery
- Could increase from the current Rs 200 per cylinder
- Supply outlook
- Alternative supplies include Russia, Brazil, and African countries; some regional cargoes have been delayed
Quotes
Anonymous refinery executive
A refinery executive commenting anonymously on regional oil supplies.
“Owing to these developments (in West Asia), crude oil prices have increased in the past few days and Indian crude basket has crossed the $100 per barrel mark. As a result of the surge in crude prices, marketing margins on auto fuels are likely to turn negative and domestic LPG under recoveries could increase from the current Rs 200 per cylinder.”
rediff.com
“There is definitely uncertainty over supplies (from West Asia), but we have alternative supplies, including from Russia, Brazil and African countries. At least one or two cargoes have been delayed from the region due to fresh attacks, but we have secured supplies until September-October.”
rediff.com
Sources
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