The Hindu Business Line : Crude oil basket hits new high at $97/barrel

The country’s crude oil basket touched a new high on Friday at $97.16 a barrel. This was $1.74 up from a day earlier ($95.42 a barrel), and the highest for the current fiscal. The international crude prices had struck a record high in January crossing $100 a barrel mark. On Friday, the price of New York crude touched a fresh high of $103.05 a barrel and subsequently eased.

Ahead of the Organisation of Petroleum Exporting Countries (OPEC) meeting on March 5 the international crude prices continued to hover over $100 a barrel mark on Monday.

The Indian crude basket comprises Oman-Dubai sour (high sulphur) grade crude and Brent dated sweet (low sulphur) crude in 61.4:38.6 ratio. Brent, on Friday, closed at $100.99 a barrel. Both Dubai and Oman crude closed higher from the previous day on Friday at $94.70 a barrel and $94.80 a barrel, respectively. The Indian crude oil basket has averaged $92.37 a barrel in February against $89.52 in January.

Global prices impact

The soaring global crude prices have an impact on the profitability of the domestic oil marketing companies (OMCs), as they sell petroleum products below the cost price.

As of March 1, the desired increase in the retail selling price (RSP) of petrol at current crude price levels is Rs 9.68 per litre, diesel Rs 12.21 per litre, kerosene sold under public distribution system Rs 20.95 per litre, and cooking gas Rs 303.66 per cylinder.

The Government, on February 14, decided to hike the retail selling prices of petrol and diesel by Rs 2 and Re 1 a litre, respectively. It, however, left the prices of LPG and kerosene untouched.

Bonds issue

It also decided to increase oil bonds issued by the Government to partially offset the impact of selling the four products below the cost price.

The bonds will now cover 57 per cent of the total under-recoveries from the current 42.7 per cent. The total under-recoveries on sale of four products — petrol, diesel, cooking gas and kerosene — are estimated at Rs 71,808 crore for the fiscal.

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