NEW DELHI: India’s average crude import price crossed the $100 per barrel mark for the first time in six weeks last Friday and is likely to rise further as international crude prices surge amid intensified hostilities in West Asia and supply disruptions through the Strait of Hormuz.Indian basket of crude oil – derived average of the sweet-grade global benchmark Dated Brent and the sour-grade benchmarks of Oman and Dubai – increased to $101.07 per barrel Friday, the highest since July 23, Petroleum Planning and Analysis Cell data showed.
Likely To Rise Further Amid West Asia Crisis
Along with crude, international free-on-board (FOB) prices of petrol and diesel have also surged. While the international FOB price of diesel has averaged $156.88 a barrel this month, up from $149.35 in Aug, the corresponding price for petrol has averaged $122.12 this month, compared to $110.87 in Aug. Premium on diesel over crude has narrowed to 55% from 70% in the last 10 days. The crude basket has so far averaged $99.38 per barrel in Sept, up from $90.19 in Aug. It was above $100 per barrel during the peak of the conflict in March, April and May.An oil company executive said this could lead to higher under-recoveries for oil marketing companies (OMCs) if prices remain elevated for a longer duration and retail pump prices remain unchanged.Oil retailers were making an under-recovery of more than Rs 1,000 crore a day during the peak of the conflict in May, when the Indian basket of crude oil averaged more than $110 per barrel.Ratings agency ICRA said renewed hostilities between Iran and the US pose a challenge for the limited crude oil supplies coming through the Strait of Hormuz. “As Iran threatens to establish a new restricted maritime zone extending beyond the Strait of Hormuz, additional energy flows beyond the latter could be at risk. Owing to these developments, crude oil prices have increased in the past few days, and the Indian crude basket has crossed the $100/barrel mark,” said Prashant Vasisht, senior vice-president and co-group head, corporate ratings, ICRA.
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