NEW DELHI :
As crude oil prices surge by as much as 20% following drone attacks on Saudi Arabia's oil facilities, the prices of petrol and diesel are all set to rise in India. The effect on petrol and diesel prices, that are changed every day at 6 am, was marginal today but it is expected that the increase will be sharper in the next few days.
Hindustan Petroleum Corp Ltd (HPCL) said the price of petrol and diesel at retail outlets might go up if the price of crude stays at current levels. "Price of product at fuel outlets might be impacted if crude price continues to go up by 10%," M K Surana, chairman of HPCL told Reuters.
Surana, however said, that a continued high crude price is not sustainable.
State-run oil fuel marketing companies fix the retail price of petrol and diesel based on a complex formula using a 15-day average of last 15 days of benchmark price of petrol and diesel in the Middle East, as well as the dollar-rupee exchange rate. India imports about 70% of its crude oil requirements.
In a report, Kotak Institutional Equities said oil marketing companies might increase retail price of diesel and petrol by ₹5-6 per litre.
"We do not rule out a possibility of moderation in marketing margins on auto fuels—a $10/bbl rise in global crude and product prices may require OMCs to increase retail price of diesel and gasoline by Rs5-6/liter in the following fortnight," Kotak said.
The spike in global crude prices, even though temporary, will be negative for downstream oil marketing companies (BPCL, HPCL and IOCL) and Castrol, it said.
Goldman Sachs said an outage of more than six weeks due to drone attacks on Saudi Arabian oil facilities over the weekend could cause Brent prices to rally above $75 a barrel, although the magnitude of the impact was uncertain at this point.
In its biggest intra-day percentage gain since the Gulf War in 1991, Brent jumped more than 19% to $71.95 a barrel on ICE Futures Europe.