NEW DELHI : The price of diesel purchased by bulk industrial buyers increased by ₹25 a liter, due to high crude oil prices, people familiar with the development said.
Wholesale buyers, including factories, transportation fleets and shopping malls, purchase fuel directly from petroleum marketing companies. In the national capital, the diesel price for bulk diesel is around ₹115 per litre, whereas in Mumbai it is around ₹122 per liter.
Connoisseurs also said that with rising prices, bulk buyers are now turning to retail gas pumps.
Queries sent to Indian Oil Corporation, HPCL and BPCL went unanswered until the story was published.
Despite the relentless rise in crude oil prices and increasing under-recoveries for OMCs, retail pump prices are still stable. Retail prices have been unchanged for over four months now.
On Sunday, the retail price of gasoline was unchanged at ₹95.41 per litre, while diesel was selling ₹86.67 per liter in the nation’s capital.
High global crude oil prices are a major concern for India, as the country imports 85% of its oil demand. A transfer of the price increase to retail prices would have an impact on the inflation rate and not increasing retail prices would have an impact on the finances of the MOCs, according to experts.
On Friday, the May Brent futures contract on the Intercontinental Exchange closed at $107.93 a barrel, up 1.21% from its previous close. West Texas Intermediate’s April contract rose 1.67% to $104.70 a barrel.
Crude oil prices soared at the end of the week as fears of a supply shortage intensified after the International Energy Agency (IEA) raised concerns about a major shortage of supply due to non-availability of Russian oil.
In its March 2022 oil market report, the IEA said that Russia’s invasion of Ukraine and possible Western sanctions on its oil exports could mean that 3 million barrels per day of Russian supply would be effectively cut off from global markets from next month.
The IEA said in its report: “The prospect of large-scale disruptions in Russian oil production threatens to create a global oil supply shock. and buyers avoid exports. OPEC+ is sticking, for now, to its agreement to increase supply by modest monthly amounts.
Only Saudi Arabia and the United Arab Emirates hold substantial spare capacity that could immediately help offset a Russian shortfall, he added.
Earlier this month, the agency also announced that its member countries would release 61.7 million barrels as part of its emergency response plan to ease rising tensions in oil markets stemming from the invasion. Russian from Ukraine.
On the other hand, the Organization of the Petroleum Exporting Countries (OPEC) in its March monthly report also said that oil demand in 2022 faces the challenges of Russia’s invasion of Ukraine and the rise in inflation. However, the cartel has not changed its robust demand forecast this year. Carter stuck to his estimate that global oil demand will increase by 4.15 million barrels per day (bpd) in 2022.
The report further states that the war in Ukraine and lingering concerns over Covid-19 are reshaping the global economy, which would negatively impact global growth in the near term.
Aside from declining in a few sessions last week, crude prices have been broadly higher over the past two months amid the Russia-Ukraine crisis and volatility has intensified following the Russian invasion of the ‘Ukraine.
On March 7, Brent crude had touched $139.13 a barrel, the highest since 2008. Prices began to fall on March 9, after the United Arab Emirates (UAE) declared itself in favor of higher production of OPEC. Crude prices then fell for about five consecutive sessions on hopes of ceasefire talks between Russia and Ukraine and fears of lower demand amid new Covid restrictions in China.
Although higher crude oil prices have yet to be passed on to gasoline and diesel consumers, oil marketing companies raised jet fuel prices by 18% on Wednesday. For starters, aviation turbine fuel (ATF) prices are now above the ₹1 lakh per kiloliter mark.
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