The Hindu Business Line : Domestic crude oil basket hits $142 a barrel

New Delhi, July 4 The continued volatility in international crude oil prices has led to the Indian basket soaring to $142.04 a barrel on Thursday. Global crude oil prices on July 3 breached the $146 a barrel mark, before softening down.

India imports 75 per cent of its crude oil requirements. The Indian crude basket price has averaged $139.83 a barrel so far this month. This surge in crude oil prices has led to increasing pressure on the profitability of the public sector oil marketing companies (OMCs) which sell petroleum products below the cost price.

Revenue loss

As on July 1, the companies were losing Rs 14.92 a litre on petrol sale, Rs 24.90 a litre on diesel, Rs 38.09 a litre on kerosene, and Rs 338.53 a cylinder on liquefied petroleum gas (cooking gas). The Government had, effective June 5, increased the retail selling price of petrol, diesel and cooking gas to partially offset the revenue loss suffered by the OMCs – Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation. It, however, left the price of kerosene untouched.

Subsequent to the price revision, the revenue loss incurred by OMCs on petrol had come down to Rs 9.67 a litre and diesel Rs 18.68 during the first fortnight of June. The revenue loss on cooking gas stood at Rs 302.93 a cylinder and kerosene Rs 35.98 a litre for June. However, this dip in under recovery figures was shortlived with continued volatility in crude oil prices. The OMCs review the figures for auto fuels on a fortnightly basis and that of cooking fuels on a monthly basis.

Deora at Madrid

The Petroleum Minister, Mr Murli Deora, addressing the 19th World Petroleum Congress on June 3 at Madrid, had said, “A small section of the oil analysts has been ascribing the relentless rise in crude prices in recent months to the spurt in demand for oil from India and China. I wish to take this opportunity to set the record straight. While China and India account for over one-third of the global population, their combined oil consumption is less than one-eighth of the world’s consumption.”

“And, with steadily declining energy intensity, both our countries are registering rapid economic growth with less than proportionate increase in oil demand…..India’s refining capacity today stands higher than our oil demand. This has a sobering effect on the product prices by reducing the mismatch between product demand and supply. Given these facts, we are of the firm view that attribution of high crude prices to rising demand from India and China is completely devoid of merit and misses the wood for the trees,” he said.

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