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NEW DELHI : Price of diesel purchased by bulk industrial buyers have increased by 25 per litre, on the back of high crude oil prices, said people in the know of the development.

Bulk buyers, including factories, transport fleets and shopping malls, purchase fuel directly from oil marketing companies. In the national capital, price of diesel for bulk diesel is around 115 per litre, while that in Mumbai is about 122 a litre.

The people in the know also said that with the hike in prices, bulk buyers are now turning towards retail fuel pumps.

A spokesperson for BPCL confirmed the price hike, while queries sent to Indian Oil Corporation and HPCL remained unanswered till publishing of the story. 

Despite the incessant rise in crude oil prices and increasing under recoveries for OMCs, retail pump prices are still steady. Retail prices have been unchanged for over four months now.

On Sunday, the retail price of petrol was unchanged at 95.41 a litre, while diesel was sold for 86.67 per litre in the national capital.

High global crude oil prices bring about major concerns for India as the country imports 85% of its oil demand. A transfer of the price hike to retail prices would impact the inflation rate and not increasing retail prices would impact the financials of OMCs, according to experts.

On Friday, the May contract of Brent futures on the Intercontinental Exchange closed at $107.93 per barrel, up 1.21% from its previous close. The April contract of West Texas Intermediate rose 1.67% to $104.70 a barrel.

Crude oil prices soared by the end of the week as fears of a supply crunch intensified after the International Energy Agency (IEA) raised concerns of a major supply crunch due to non-availability Russian oil.

In its oil market report for March 2022, IEA has said that Russia’s invasion of Ukraine and the eventual Western sanctions on its oil exports could mean 3 million barrels a day of Russian supply effectively cut off from global markets starting next month.

IEA said that in its report: "The prospect of large-scale disruptions to Russian oil production is threatening to create a global oil supply shock. We estimate that from April, 3 mb/d of Russian oil output could be shut in as sanctions take hold and buyers shun exports. OPEC+ is, for now, sticking to its agreement to increase supply by modest monthly amounts."

Only Saudi Arabia and the UAE hold substantial spare capacity that could immediately help to offset a Russian shortfall, it added.

Earlier this month, the agency also announced that its member countries will release 61.7 million barrels of under its emergency response plan to alleviate the increasing tightness in oil markets resulting from Russia’s invasion of Ukraine.

On the other hand, the Organization of the Petroleum Exporting Countries (OPEC) in its monthly report for March also said that oil demand in 2022 faced challenges from Russia's invasion of Ukraine and rising inflation. However, the cartel did not change its forecast for robust demand this year. The carter stuck to its estimate that world oil demand would rise by 4.15 million barrels per day (bpd) in 2022. 

The report further said the war in Ukraine and continued concerns about Covid-19 were reshaping the world economy, which would have a negative impact on global growth in the short term.

Apart from decline in few sessions last week by and large crude prices have been largely on the upside in the past couple of months amid the Russia-Ukraine crisis and the volatility intensified after Russian invaded Ukraine.

On March 7, Brent had touched $139.13 per barrel, the highest since 2008. Prices started easing on March 9, after the United Arab Emirates (UAE) said that it was in favour of higher production by OPEC. Crude prices then declined for around five sessions in a row over hopes of ceasefire talks between Russia and Ukraine and concerns of falling demand amid fresh Covid restrictions in China.

Although, the increase in crude oil prices has not been transferred to consumers of petrol and diesel so far, oil marketing companies raised jet fuel prices by a steep 18% on Wednesday. In a first, aviation turbine fuel (ATF) prices are now above the 1 lakh per kilolitre mark.

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