Daijiworld Media Network – New Delhi
New Delhi, Mar 3: International crude oil prices have jumped nearly 9–10 per cent following coordinated strikes by Israel and the US on Iran, intensifying tensions in West Asia and triggering concerns over fuel costs in import-dependent nations like India.
Global benchmark Brent crude moved close to $80 per barrel, while US crude futures advanced 8.6 per cent to $72.79, up from around $67 last Friday.
India, which meets nearly 88 per cent of its crude oil requirement through imports, could face a higher import bill and potential inflationary pressures if elevated prices persist. However, retail petrol and diesel prices in the country are unlikely to see an immediate revision.
According to report citing official sources, the government is continuing with a calibrated pricing approach that allows oil marketing companies (OMCs) to build margins during periods of low international crude prices while cushioning consumers when global rates spike.
Retail fuel prices have remained unchanged since April 2022. During this period, state-run companies such as Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited have absorbed losses when crude prices were high and gained when rates softened.
As a result, domestic pump prices have remained stable despite volatility in global markets. Likewise, consumers did not benefit from price cuts when international fuel prices eased in line with falling crude.
Sources indicated that the government intends to continue shielding consumers under this framework unless crude prices witness an exceptionally sharp and sustained surge.
With Assembly elections approaching in key states such as West Bengal, Tamil Nadu and Assam, the Centre is also keen to avoid fuel price hikes that could provide political ammunition to the opposition, the report noted.
Amid escalating hostilities, Union Petroleum and Natural Gas Minister Hardeep Singh Puri reviewed the crude oil, LPG and petroleum products situation during a meeting with senior ministry officials and executives of public sector oil companies.
A significant portion of India’s crude oil and gas supplies transit through the Strait of Hormuz, a strategic chokepoint that Iranian authorities have reportedly threatened to close following the strikes. Nearly one-third of global seaborne crude oil exports and around 20 per cent of liquefied natural gas shipments pass through this narrow channel.
“They have sufficient buffers to manage this kind of price spike,” a source familiar with the matter said, referring to oil companies. The source recalled that crude had touched $119 per barrel in June 2022 after Russia’s invasion of Ukraine. While OMC profits were modest that year, they reported record profits of around Rs 81,000 crore in FY24.
If disruptions in the region continue, oil cargoes may need to be rerouted around the Cape of Good Hope, increasing transit time, freight charges and insurance costs.
For now, despite the sharp spike in global crude prices, Indian consumers are unlikely to see an immediate increase at the fuel pumps. However, sustained geopolitical tensions in West Asia could test the resilience of the current pricing strategy in the months ahead.