Crude Oil Surges Above $100 as West Asian Tensions Escalate
Crude oil prices have surged above $100 per barrel, putting pressure on petrol and diesel prices in India. The increase is largely attributed to fresh hostilities in West Asia, which has pushed Brent crude prices up by 2.5%.
The Indian government's decision to freeze retail pump rates for over three months has led to fuel retailers incurring losses of Rs 5 per litre on petrol and Rs 23 a litre on diesel. Analysts warn that sustained price increases can put pressure on the country's trade balance and the rupee.
Rajeev Sharan, Head of Research at Brickwork Ratings, expects Brent crude prices to stay firm and volatile in the coming months due to ongoing geopolitical tensions. He notes that costlier crude will squeeze margins in oil-sensitive sectors such as aviation, paints, tyres, chemicals, logistics, and parts of FMCG.
Prashant Vasisht, Senior Vice President at ICRA Ltd, warns that higher crude prices can feed into domestic inflation through fuel, transport, and other energy-related costs. He also notes that the impact on consumers and the wider economy will depend on how much of the increase is passed through to domestic fuel prices.