Summary
There has been no increase in the prices of petrol and diesel in India for four months due to the ongoing assembly in UP. For this reason, the losses of domestic oil companies are increasing.
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Expansion
ICICI Securities said in a report that government-owned retailers have been suffering heavy losses due to rising global crude oil prices in the last two months. Domestic oil companies will have to increase the prices of petrol and diesel by Rs 12.1 per liter on or before March 16, 2022 only to cover the cost. Also adding the margin (profit), they will have to increase the price by Rs 15.1 per liter.
The report said that India imports 85 percent of its crude oil requirement. Therefore, domestic petrol and diesel prices are influenced by the global crude oil prices.
… then the margin may decrease by Rs 10.1
The report said that due to the absence of price hike in the domestic market since Diwali, the net margin of retail oil companies has reached minus Rs 4.29 per liter as of March 3, 2022. If the prices of petrol and diesel are not increased, then the net margin of these companies at the current global price may reach below zero Rs 10.1 per liter by March 16 and Rs 12.6 per liter by April 1, 2022.
Crude at 9 year high
Crude oil in the global market rose to $ 120 a barrel on Thursday. This is its 9 year high. However, with some softening in prices on Friday, crude oil came down to $ 111 a barrel. Yet the gap between the cost of oil and retail sales rates is widening.
Crude may reach $185
Morgan Stanley says that due to sanctions from US and European countries, Russia is not able to export oil freely. At present, it is exporting only 66 per cent of its oil. If the supply of oil from Russia continues to be disrupted, then crude oil in the global market can reach $ 185.
Price increased by Rs 35.89 in four months
According to the Petroleum Planning and Analysis Cell (PPAC), the price of crude oil that India buys increased to $ 117.39 per barrel on March 3, 2022. This price is the highest since 2012. At the beginning of November last year, when the increase in petrol and diesel prices was stopped, the average price of crude oil was $ 81.5 per barrel. In this way, the price of crude oil has increased by Rs 35.89 in four months.