Oil companies plan to cut losses accumulated by holding rates stable in the run-up to elections in five states, including Uttar Pradesh, according to industry experts. Petrol and diesel prices must rise by Rs15 per litre for fuel retailers to break even, according to industry analysts. Oil companies are also attempting to counteract soaring international prices, which have risen to a 13-year high of US$140 per barrel as a result of Russia’s invasion of Ukraine; brent crude was trading at over US$139 per barrel at one time.
To make matters worse, the rupee hit a new low versus the US dollar of 76.96. When the Covid epidemic began in April 2020, the previous low was 76.90. Insiders told Reuters that if oil companies are to break even, they will need to raise prices by at least 10%. According to a forecast published last week by ICICI Securities, the price of gasoline will rise by $15.1 per litre.
As a result of the global rise in crude oil prices caused by the geopolitical situation, India’s domestic petrol and diesel prices are likely to rise by Rs 15-22 per litre.
India buys nearly 85% of its oil from other countries, making it one of Asia’s most vulnerable to rising prices.
According to industry estimates, a 10% increase in crude oil prices contributes about 10 basis points to CPI inflation. The issue, combined with concerns about decreased supply, has pushed Brent crude oil prices to a 13-year high of about $139 per barrel.
