2 weeks ago
Petrol Prices Steady as Crude Climbs Amid US-Iran Hormuz Deadlock
Every day, cars and buses need fuel like petrol and diesel to run.
On Sunday, 16 August, the price of petrol and diesel in India stayed the same as before.
But the raw ingredient used to make petrol, called crude oil, got more expensive this week.
Part of the reason is that the United States and Iran are having a big disagreement over a narrow sea path called the Strait of Hormuz.
Many ships carry oil through that waterway.
The US president said Iran would face money problems if it did not agree to a deal, while Iran said talks have not resumed.
To make sure India always has enough fuel for its own people, the government changed some taxes on fuel sold to other countries.
An expert in India said that if India buys less oil from Russia, it could end up paying 5 to 10 billion dollars more every year.
Different cities in India charge slightly different prices for the same fuel.
Petrol and diesel prices held steady across major Indian cities on 16 August, with New Delhi petrol at ₹102.12 and diesel at ₹95.20 per litre.
Brent crude settled 1.67% higher at $88.52 a barrel on Friday, gaining nearly 6% for the week amid the US-Iran deadlock over the Strait of Hormuz.
US President Donald Trump threatened Iran with economic consequences, calling the US blockade of Iranian ports a "wall of steel" over Hormuz.
India cut the diesel export levy to ₹24 per litre, lowered the ATF tax to ₹19.5, and set the petrol export duty at zero for the 15-31 August fortnight.
Economist Santosh Mehrotra warned India's annual oil import bill could rise by $5-10 billion if it cuts purchases of Russian crude by 50%.
- Who
- US President Donald Trump, Iranian Foreign Minister Abbas Araghchi, economist Santosh Mehrotra, and Indian fuel consumers.
- What
- Petrol and diesel prices stayed steady in Indian cities while crude oil rose nearly 6% for the week, and India slashed export levies on diesel, ATF and petrol.
- Where
- Major Indian cities, the Strait of Hormuz, and Long Island in the US.
- When
- Sunday, 16 August; Brent crude settled higher the previous Friday.
- Why
- The US-Iran standoff over the Strait of Hormuz pushed crude prices up, while India adjusted levies to safeguard domestic fuel availability.
Iran and importers' view
US pressure view
Strait of Hormuz talks
Iran and importers' view
Iranian Foreign Minister Abbas Araghchi said an agreement with Oman would not translate into the strait's reopening, and that Iran has not decided to resume negotiations with the US, with any deal depending on conditions the US must meet.
US pressure view
US President Donald Trump threatened Iran with economic consequences in a speech on Long Island, describing the US blockade of Iranian ports as a "wall of steel" that lets Washington effectively govern Hormuz.
India's Russian crude purchases
Iran and importers' view
Economist Santosh Mehrotra says India depends on Russia for about 50% of its oil supply, and cutting purchases by 50% could raise the import bill by $5-10 billion a year and push inflation up by about 0.3 percentage point.
US pressure view
Washington's proposed Russia sanctions bill allows tariffs of up to 100% on major buyers of Russian energy, pressuring countries like India to reduce their reliance on Russian crude.
Key facts
- Brent crude (Friday close)
- $88.52 per barrel, up 1.67%
- Weekly crude gain
- About 6%
- Petrol price in New Delhi
- ₹102.12 per litre
- Diesel price in New Delhi
- ₹95.20 per litre
- Diesel export levy
- ₹24 per litre, down from ₹25.5
- Petrol export duty (SAED & RIC)
- Zero per litre
- ATF export tax
- ₹19.5 per litre, down from ₹22
- India's Russian crude dependence
- About 50% of oil supply
Quotes
Iranian Foreign Minister Abbas Araghchi
Foreign Minister of Iran
“"this does not constitute negotiation. We have not yet made a decision to resume negotiations with the US."”
livemint.com
“"wall of steel" which enabled Washington to effectively govern Hormuz”
livemint.com
Economist Santosh Mehrotra
Economist and former UN advisor
“"In today's date, we have to keep in mind that our dependence on Russia is about 50 per cent for the oil supply."”
livemint.com
Sources
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