Savings for Indian refiners from purchasing Russian oil have decreased to a third of what they were in the years following Russia's invasion of Ukraine, which triggered global crises, sanctions, and discounted Russian oil seeking buyers. Despite this, savings from importing cheap Russian oil were significant enough to help Indian refiners tide over frozen petrol and diesel pump prices.
The rupee has depreciated by 0.6 per cent so far in the current financial year.
Maintaining that the Indian economy was resilient to oil price shocks, Reserve Bank of India Governor Y V Reddy on Wednesday said the oil prices needed to be closely monitored, though it is not a disturbing factor.
This means lower losses on fuel sales by Indian oil companies and a shrinking oil subsidy bill for the government.
If the global economy slows down or slips into a recession due to high oil prices, that will eventually hurt all of us.
Suddenly, demand-supply mismatch is no longer offered as the standard plausible explanation.
Government will review fuel pricing scenario in October, Petroleum Secretary M S Srinivasan said on Thursday. The petroleum secretary further said, "Situation will be revisited in October when we will take stock of the scenario emerging out of international oil prices." Global crude prices touched a record $145 a barrel, which is expected to push India's oil import bill this year higher by nearly 76 per cent to $110-120 billion.
The interest of the poor can be protected by providing targeted subsidy, Planning Commission's Deputy Chairman Montek Singh Ahluwalia said, adding that increased energy cost would have to be shared by the consumers as the burden is currently being largely borne by public sector oil companies.
"We have the toughest sanctions ever imposed. But on oil, we want to go a little bit slow because I don't want to drive the oil prices in the world up," Trump told reporters.
Dr Nagesh Kumar, one of the three new MPC members, wanted the MPC to reduce the repo rate by 25 basis points to 6.25%.
Despite the recovery to above $40 levels after hitting $28-29 in Jan, worries of over-supply in the face of weak demand remain.
India's exports registered a steepest decline in 13-month falling 9.3 per cent in August to $34.71 billion due to global economic uncertainties, while the trade deficit soared to a 10-month of $29.65 billion. According to the government data released on Tuesday, imports increased by 3.3 per cent to $64.36 billion, which is a record high, due to a significant jump in the inbound shipments of gold and silver.
According to the 'American Express Business Travel Monitor' which tracks and analyses published airfares on a quarterly basis, 'although fares moderated in the fourth quarter, the influences of rising oil prices and economic growth in the region are too strong to keep prices steady'.
Finance Minister P Chidambaram on Monday said the surge in international oil prices is a matter of grave concern and it was for the petroleum ministry to take a call on retail pricing of petroleum products.
The policy review observed that the moderation in inflation, excluding food and fuel, that was witnessed in the first quarter of 2017-18 has "by and large, reversed".
Pushing a barrel of oil back to around $100 would require a reduction of production of about two million barrels a day - a cut that would fall predominantly on Saudi Arabia.
The US Fed interest rate decision, ongoing quarterly earnings, macroeconomic data and FII trading activity are the major triggers that will drive stock markets this week, analysts said. Investors would also track global market trends and the movement in global oil prices for further cues. "This week, the focus will shift to global cues, particularly the US markets," Santosh Meena, Head of Research, Swastika Investmart Ltd said.
Amid concerns over price rise, Prime Minister Manmohan Singh on Wednesday said inflation will come down to 6.5 per cent by March-end if the international oil prices soften and commodity prices do not rise further.
State-owned fuel retailers are losing close to Rs 3 per litre on selling diesel while the profit on petrol has trimmed due to recent firming up in international oil prices, industry officials said detailing reasons for continuing to hold retail prices. Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), who control roughly 90 per cent of India's fuel market, 'voluntarily' have not changed petrol, diesel and cooking gas (LPG) prices for almost two years now, resulting in losses when input cost was higher and profits when raw material prices were lower.
Modi made a strong case for a partnership between the producers and consumers in the oil market as it exists in other markets.
Low fuel prices to help oil marketing and refining sectors but upstream players will stay under pressure.
The real benefits can be seen when prices stabilise, preferably at levels acceptable to both consumers and producers.
'As the markets are expected to remain jittery in the near term, we advise investors to use this opportunity to enter quality largecaps from a long-term perspective.'
Indian Oil Corporation has approached the petroleum ministry with a proposal to raise oil prices by Rs 5.29 a litre and diesel by 4.54 a litre in line with the price band formula worked out by the government.\n\n
Crude oil price of $50 a barrel in the international market would pull down India's GDP growth by 0.4 per cent and push up inflation by 1.5 per cent, a FICCI study has said.
'We expect market consolidation and recommend buying during market dips.'
The dollar devaluation has seen revenue loss incurred by state-run oil firms on fuel sales trimming to about Rs 96 crore per day.
'As matters stand, Russia and Saudi Arabia, two of the world's biggest oil producers, are set for a hard landing as they didn't diversify their economies as much as they should have when the oil prices were booming.'
Finance Minister P Chidambaram on Tuesday said that surging global oil prices may pull down India's economic growth by 0.5 per cent but expected stable interest rates to spur investment.
A higher-than-expected consumer price inflation (CPI) print for March in the US has dashed hopes of an interest rate cut by the US Federal Reserve (US Fed) in June. Analysts now expect the US central bank to start cutting rates in September, provided inflation remains in check and oil prices remain supportive. The markets, analysts believe, partially factored in this possibility.
Prime Minister Narendra Modi on Friday invited President Volodymyr Zelenskyy to visit India and the Ukrainian leader said he would be happy to travel to the 'great' country.
Making sense of the international crude market is incredibly hard.
Global trends, macroeconomic data announcements and the start of the earnings season would be the major drivers for the equity markets in a holiday-shortened week, analysts said. Equity markets will remain closed on Thursday for Eid-Ul-Fitr. Trading activity of foreign investors, rupee-dollar trends and crude oil prices would also guide trends in markets.
A resurgence in Saudi Arabian supplies of crude oil to India coupled with an attack on an Iraqi tanker in August carrying crude to Europe may result in improved bargaining power for India with West Asian and Russian suppliers for winter supplies. Shipments of Saudi oil rebounded in September from August, surging to the highest since March while Russian oil shipments rose marginally as Saudi Arabia tried to claw back market share in Asia, according to industry sources and ship tracking data.
"This year (2009-10), our WPI is low and I don't see any problem on the horizon which could destabilise us except oil prices which remain a question," said Rajya Sabha MP and former Reserve Bank Governor Bimal Jalan. On the high fiscal deficit, Jalan said he did not think stimulus packages posed a problem. On taxation, he said it would not be good for the country not to have a reasonable rate of tax on profit and dividend.
The Consumer Price Index-based inflation rose to 5.11% in January
The task of Union Finance Minister Arun Jaitley to keep inflation under check, even when the country reeled under severe drought for two years in a row, and reduce the current account deficit, was made easier by low crude oil prices.
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