Summary
Russia Ukraine Impact on Markets: In order to avoid any shortage in the supply of crude due to the Russia-Ukraine crisis, it was agreed to release 60 million barrels of oil from their strategic reserves in all 31 member countries of the International Energy Agency, including the US. Despite this, the price of US standard crude oil rose by $ 5.24 per barrel to $ 108.60 on Wednesday. Brent crude rose $5.43 to $110.40.
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Expansion
All 31 member countries of the International Energy Agency, including the US, agreed to release 60 million barrels of oil from their strategic reserves to ensure that there is no shortage of crude due to the Russia-Ukraine crisis. Despite this, the price of US standard crude oil rose by $ 5.24 per barrel to $ 108.60 on Wednesday. Brent crude rose by $5.43 to $110.40, while petrol and diesel prices have not increased in the domestic market for 118 days. Brokerage company JP Morgan said, with the end of next week of assembly elections in five states, the prices of petrol and diesel will start increasing. For normal margin, oil companies can increase the price by Rs 9 per liter or up to 10%.
Crude oil prices have increased by $ 29 in three months
The Petroleum Planning and Analysis Cell said that the price of crude oil that India buys increased to more than $110 a barrel on March 2, 2022. This price is the highest since August 2014. At the beginning of November last year, the average crude oil price stood at $81.5 per barrel. In this way, the price has increased by about $ 29 in three months.
- Oil companies can increase the price by up to Rs 09 per liter
- Petrol-diesel prices have not increased in the country for 118 days, crude oil was $ 85.1 in November
Companies lose Rs 5.70 on a liter
JP Morgan said, due to the rapid increase in crude oil, government refinery companies Indian Oil, Bharat Petroleum, Hindustan Petroleum are losing Rs 5.70 per liter on petrol and diesel. In such a situation, after the end of the assembly elections, oil companies can increase the prices of petrol and diesel on a daily basis.
Edible oil prices may increase rapidly by 20 percent in palm oil
The demand for palm oil has increased tremendously as its exports from Russia and Ukraine, the largest producers of sunflower oil, have almost stopped. Ajay Kedia, commodity expert and director of Kedia Advisory, says that Russia and Ukraine export about 70% of the total sunflower oil to the world. The shortfall in this is now being met by palm oil. For the first time, palm oil has become the most expensive among other edible oils in India under pressure from the global market due to increased demand. With this, all edible oils, including palm oil, can become costlier by 15-20 percent in the domestic market.
Prices increased more than three times in two years
Kedia said that in Malaysia, the largest producer of palm oil, its price in May 2020 was 1,937 ringgit (Malaysian currency). It has now increased to 7,100 ringgit, which is the highest. In this way, the price of palm oil has increased more than three times in two years.
India will have to change its strategy again
India currently imports 17 lakh tonnes of sunflower oil from Ukraine and two lakh tonnes from Russia. India will have to change its strategy again to meet the demand with increased prices due to disruption in exports from both the countries.