Petrol Diesel Prices Increase : The ongoing peace talks between the US and Iran are taking positive turns. Hence, there are hopes that the ‘Strait of Hormuz’, which was closed for the last three months, will be reopened. So now the market is optimistic that global crude oil supply will be restored again. Meanwhile, in the wake of this news, oil prices have fallen sharply in the international market. Brent crude, the global benchmark, fell 5.4 percent to $97.97 a barrel, while West Texas Intermediate was trading below $92. But at the same time, it is being said that the prices of petrol and diesel will increase even more. But why exactly?
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This drop in crude oil prices has come as a big relief to India; Because India imports more than 85 percent of its total oil requirement. Meanwhile, India’s state-owned oil companies have hiked petrol and diesel prices by around Rs 7.50 in the last 10 days, even as crude oil prices tumbled. As a result, it is natural to think that the prices of petrol and diesel in the country will come down in the near future, but in reality the situation is not the same.
Why will the prices of petrol – diesel increase?
According to financial experts and a report by ‘Kotak Securities’, despite rising petrol and diesel prices in the country, oil companies’ balance sheets are still out of balance. The conflict between Iran and the US that started on February 28. As a result, crude oil prices have risen from $70 per barrel to $114 per barrel. Even in this scenario, oil companies refrained from raising prices for 76 consecutive days and have shouldered the burden of expensive imports.
Economic experts at ‘Livemint’ have noted that since the conflict between the two countries began, crude oil prices have risen by a whopping 39 percent; In contrast, petrol and diesel prices have so far been hiked by only 3 to 7 percent. As a result, to fully recoup their losses, companies may theoretically have to increase prices further by around Rs 11 to 14 per litre.
Another reason for rising prices
Another factor contributing to the increase in petrol and diesel prices is that, although crude oil prices have fallen to around $98 per barrel, tensions in the Strait of Hormuz have not yet fully subsided. Although the peace talks between the US and Iran have been successful, it will take some time for the situation to improve.
Moreover, due to this geopolitical crisis, marine insurance premiums and freight charges for oil tankers coming from America and Northern Europe have increased significantly. Ultimately, this additional cost will have to be offset by increasing retail fuel prices.
Ongoing losses
Despite a four-fold hike in petrol and diesel prices, oil companies are still facing losses of Rs 10 per liter on petrol and Rs 13 per liter on diesel. Companies cannot sustain such huge daily losses for long; So, to maintain their financial stability, they are left with no other option but to raise prices.
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