Crude Oil Prices Surge Above $100 Per Barrel Amid Iran-US Tensions
India's state-owned fuel retailers are struggling due to rising crude oil prices. Brent crude has surpassed $100 per barrel for the first time since July, driven by escalating tensions between Iran and the US.
The increased cost of crude oil is putting pressure on India's trade balance and currency. With over 88% of its crude requirements imported, India is particularly exposed to fluctuations in international prices.
According to Prashant Vasisht, Senior Vice President at ICRA Ltd, the marketing margins for petrol are negative Rs 5 per litre, and diesel at negative Rs 23 a litre. He warns that if the current geopolitical situation persists, crude oil prices could rise further.
Rajeev Sharan, Head of Research at Brickwork Ratings, also notes that costlier crude will squeeze margins in oil-sensitive sectors such as aviation, paints, tyres, chemicals, logistics, and parts of FMCG. He believes that the Reserve Bank of India (RBI) may hold its repo rate steady due to higher crude prices feeding into broader inflation.