At­tack on Saudi fa­cil­i­ties sets oil on fire in In­dia Sharpest Rise Since Bud­get; Prad­han Says Sup­plies In­tact

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The Times of India (New Delhi edition) - - Times Nation - TIMES NEWS NET­WORK THE TIMES OF IN­DIA, NEW DELHI

New Delhi: Pump prices recorded their sharpest rise since July 5 on Tues­day as tremors from Satur­day’s drone at­tack at the heart of Saudi Ara­bia’s oil in­dus­try and the re­sul­tant ex­plo­sion in crude prices hit In­dia, even though do­mes­tic re­fin­ers con­tinue to get Saudi crude.

As oil, fi­nan­cial and stock mar­kets re­mained jit­tery, fuel re­tail­ers raised the price of petrol by 14 paise to Rs 72.17 a litre and diesel by 15 paise to Rs 65.58 in the Delhi mar­ket, the na­tional bench­mark. The quan­tum of in­crease was higher in states due to the in­cre­men­tal in­crease in lo­cal taxes.

This is the sin­gle-largest hike since the full Bud­get pre­sented on July 5, which raised taxes to push up fuel prices by about Rs 2.5 a litre, as a re­sult of the sin­gle­high­est spike in global oil prices on Mon­day. The global marker, Brent, had shot up nearly 20% and the US marker, WTI, some 16%. The prices later closed 15% up from their pre­vi­ous close. The

up­ward trend in oil prices glob­ally has raised the threat of pump prices of petrol and diesel rising in In­dia too, par­tic­u­larly since it comes on the back of a weak­en­ing ru­pee. If the govern­ment wants to, it can to a con­sid­er­able ex­tent re­duce the im­pact on the con­sumer. It can cut taxes on pe­tro­leum prod­ucts, which ac­count for close to 40% of the re­tail price of diesel and about 50% of the petrol sell­ing price. Con­sid­er­ing that taxes were raised to shore up rev­enues when global oil prices were low, this would be only fair.

Oil min­is­ter Dhra­men­dra Prad­han tried to calm nerves over sup­ply dis­rup­tions, say­ing that In­dian re­fin­ers were lift­ing ship­ments from Saudi Ara­bia, load­ing cargo both on Mon­day and Tues­day, but volatil­ity was def­i­nitely a con­cern. “Cer­tainly, when there is a spike in prices, it cre­ates anx­i­ety,” he told re­porters here. “The events since Satur­day are a mat­ter of con­cern... We’ve lifted more than half of the con­tracted quan­tity for Septem­ber. We lifted oil (from Saudi Ara­bia) yes­ter­day (Septem­ber 16) and even to­day (Septem­ber 17),” he said on the side­lines of an event to award a con­tract for build­ing a coal gas­si­fi­ca­tion unit for Talcher Fer­tiliser Ltd.

On Tues­day, global crude prices slid 5% on an­tic­i­pa­tion of early restora­tion of lost sup­plies, but the mar­ket re­mained wary as re­ports sug­gested that Saudi Aramco has warned four large con­sumers, in­clud­ing PetroChina, of ship­ment de­lays. Gold­man Sachs has said oil prices could hit $75 if the Saudi out­age drags for more than six weeks.

In­dia is vul­ner­a­ble to price volatil­ity as it meets 83% of its crude re­quire­ment through im­ports. Saudis are its sec­ond-largest sup­pli­ers after Iraq and have be­come more im­por­tant after the loss of Ira­nian and Venezue­lan ship­ments due to sanc­tions.

Getty Im­ages/iS­tock­photo

Ev­ery $1 ap­pre­ci­a­tion in Brent price in­flates In­dia’s oil im­port bill by $2 bil­lion

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