The Hindu Business Line : Indian crude basket up at $62

New Delhi March 28 The cost of international crude for India has gone up by nearly $10 a barrel in the last two months, thereby raising once again issues like hike in fuel prices or compensation from the Government to oil companies.

What is technically known as India's crude oil basket stood at $62 a barrel on Tuesday, up 27 cents from Monday's close of $61.73 per barrel.

The basket had risen $1.03 per barrel on Monday, compared with last Friday's $60.70 per barrel.

The average for the current month till date (Tuesday) stood at $59.63 a barrel. In February, the Indian basket had averaged $56.53 per barrel compared with $52.53 in January.

With fluctuations in the international crude prices due to geopolitical tension in West Asia and Iran in particular, oil prices could be spiking again, according to analysts.

Analysts caution that the crude is expected to be strong if the current trend is any indication, coupled with the fact that only incremental supplies would now be available from the OPEC countries.

The Indian basket comprises Oman-Dubai sour grade crude and Brent dated sweet crude in 58:42 ratio. On Tuesday, the Dubai benchmark crude rose to $60.52 per barrel, up 73 cents, while the Oman benchmark rose 82 cents per barrel to $61.08. However, Brent crude closed at $63.78 per barrel on Tuesday, down 48 cents from a day earlier.

Price impact

On the impact of crude prices for the oil retailing companies, industry analysts told Business Line that unless the Government continues support in the form of compensation packages such as oil bonds, the companies may have a cause for concern.

Indian Oil Corporation Ltd was losing Rs 60 crore per day on the sale of petroleum products without including the compensation package offered by the Government. During the first fortnight of March the desired increase in the price of petrol is Rs 3.98 per litre and diesel is Rs 2.60 per litre. As on first March 1, the loss on sale of kerosene stood at Rs 12.73 per litre and on cooking gas Rs 173.25 per cylinder.

The Government had, on February 15, announced reduction on the retail selling prices of petrol and diesel by Rs 2 per litre and Rs 1 per litre respectively mainly to curb inflation. The prices had been reduced taking the average of the Indian crude basket for the first fortnight of February at $56.12 per barrel.

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