Petrol, Diesel Prices See Steepest Rise Since Budget Due To Crude Shock
Petrol and diesel prices on Tuesday witnessed the steepest rise since presentation of Union Budget 2019-20 as India voiced concern over spike in global crude oil prices following attacks on Saudi Arabian crude oil facilities.
Petrol price increased by 14 paisa per litre to Rs 72.17 and diesel by 15 paisa to Rs 65.58 per litre in Delhi, according to price information available from state-owned oil firms.
This increase is the biggest single-day hike since the July 5 budget that raised rates by almost Rs 2.50 a litre due to an increase in excise duty on fuel.
The surge in retail petrol and diesel prices on Tuesday followed nearly 20 percent surge in international crude oil prices in intraday trading—the biggest jump in almost 30 years—in response to attacks halving Saudi Arabia's output, before closing nearly 15 percent higher at four-month highs.
On Tuesday, international oil prices slid, although the market remains on tenterhooks over the threat of a military response to the attacks. Brent crude was down 36 cents, or 0.50 percent, at $68.66 a barrel.
Oil Minister Dharmendra Pradhan said India, the world's third-largest oil consumer, is keeping a close watch on the developing situation.
"Certainly when there is a spike in prices, it creates anxiety," he told reporters in New Delhi. "The events since Saturday (when the Saudi oil facilities were attacked) are a matter of concerns to us."
He, however, said that oil supplies from Saudi Arabia, India's second-biggest source, have not been disrupted.
"We have uplifted more than half of the contracted quantity for September. We uplifted oil (from Saudi Arabia) yesterday (Sept. 16) and even today (Sept. 17)," he said.
Indian oil companies, as well as the government, are in touch with Saudi oil company Aramco and authorities in the Kingdom, he said. "India is watching the situation closely."
India imports 83 percent of its oil needs. Saudi Arabia is its second-biggest supplier after Iraq. It sold 40.33 million tonnes of crude oil to India in 2018-19 fiscal, when the country had imported 207.3 million tonnes of oil.
Pradhan said reports suggest that the massive drone strike on the world's largest crude-processing facility operated by Saudi Arabia's Aramco has led to a loss of 5 million barrels per day of supplies from Saudi Arabia.
There are expectations that the largest-ever disruption of crude production in Saudi Arabia may keep oil prices elevated in the near term.
Abqaiq and Khurais are main processing centres for Saudi Arabia's Arab Extra Light and Arab Light crude oil.
China, South Korea, Japan and India are the biggest takers of the Saudi oil in Asia, with China and Japan leading the pack at an average of 900-1,100 kilo barrels per day each. India could be most exposed as its reserves are the least.