Geopolitical Tensions, Rising Crude Behind Fuel Price Hike: Oil Execs

(MENAFN- AsiaNet News)

Reasons for Fuel Price Hike

Senior executives from state-run oil companies ONGC and BPCL have said the recent increase in petrol and diesel prices reflect the impact of prolonged geopolitical tensions in West Asia, rising global crude oil prices and mounting pressure on oil marketing companies due to under-recoveries.

Speaking on the impact of the West Asia conflict, ONGC Director (Exploration) Sushma Rawat said crude oil prices have remained highly volatile amid uncertainty over the conflict. "Whenever there is a declaration that there is a peace accord, the crude prices start to dip. And when you realise that there is no solution, the prices go up again," Rawat said.

She said India had so far shielded consumers from the full impact of the surge in global energy prices. "The government has given relief to the people for 76 days, during which the price has not increased. The price has increased, because the OMCs were taking a hit of almost Rs 1,000 crore a day. How long do you sustain that?" she asked.

Former Marketing Director, Bharat Petroleum Corporation Ltd, Sukhmal Kumar Jain also said public sector oil companies had been under severe financial pressure due to rising crude prices and a weakening rupee. "The public sector oil companies are still in heavy under-recoveries," Jain said, adding that crude prices had risen from around USD 65-70 per barrel to USD 110-115 per barrel during the conflict period.

He said India's dependence on imported crude oil had amplified the impact on the economy. Jain said India is dependent on imports to meet about 85 per cent of its crude requirements. He said depreciation of the rupee against the US dollar has further increased the burden on oil companies. "The situation for the oil companies is that the cost is more and the recovery is less," he said.

The two oil sector executives said the government had tried to protect consumers for as long as possible by absorbing a large part of the increase in global energy costs.

Rawat described the recent fuel price hike as a form of "belt tightening" during a difficult period. "If there is a crisis in the family, belt tightening... this price increase, I am looking at it as a belt tightening," she said.

She also stressed the need for energy conservation and said India's energy security was closely linked to its economic stability. "Energy security is our economic security. We have to maintain economic security," Rawat said.

India's Strategy to Manage Supply Disruptions

The ONGC Director said India's strategy of diversifying crude oil sourcing beyond the Middle East had helped the country manage supply disruptions better. "We have diversified our sources... India's diplomatic scenario is very good. India has very good relations with other countries," she said.

Jain also said India's diversified sourcing strategy after the Ukraine crisis had helped ensure uninterrupted refinery operations despite disruptions around the Strait of Hormuz. "I have not heard that any refineries have gone for a throughput cut. They are getting good crude," he said.

Push Towards Cleaner Energy

The two oil sector executives also said the ongoing crisis could accelerate India's push toward cleaner and alternative energy sources. "We should increase renewables and non-fossil fuels. So I think this will be a catalyst... to speed up those processes," Rawat said.

Jain highlighted India's progress in renewable energy, biofuels and diversification of energy sources, saying the country had strengthened its energy security significantly over the past few years. (ANI)

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)

MENAFN24052026007385015968ID1111162103