Petrol, diesel prices up for 4th straight day as US strike roils oil market

Petrol and diesel prices rose for the fourth straight day on Sunday as global oil prices jumped after the US killed a top Iranian general, fanning fresh fears of conflict in the crude-rich Middle East. Retail pump price of petrol was hiked by 9 paise per litre and that of diesel by 11 paise, according to a price notification of state-owned fuel retailers.

Petrol in Delhi now costs Rs 75.54 per litre, the highest in more than a year, while a litre of diesel comes for Rs 68.51. While global stock markets were mixed following the US killing of Qasem Soleimani, oil prices jumped more than 3 per cent on Friday. Oil markets will reopen on Monday after the weekend break. ‎The killing of Soleimani represents "a significant spike in geopolitical risks and could lead to a direct confrontation between the US and Iran," Oxford Economics said in a commentary.

India is 84 per cent dependant on imports to meet its oil needs and any spike in global prices has a direct bearing on its economy. Not just imports but even domestic crude oil -- which forms the raw material for making petrol, diesel and other petroleum products are priced according to international benchmarks. Middle East accounts for more than two-thirds of the country's oil imports, with Iraq and Saudi Arabia being the top suppliers.

Even though the import basket has been sought to be diversified with oil being contracted from nations such as the US, pricing in all the regions is governed by international benchmarks and rates went up everywhere following Friday's strikes. Officials said there is no immediate threat of any supply disruption to India and the only impact would be felt in prices.

For an economy that is struggling to recover from a six-year low growth rate of 4.5 per cent, a spike in oil prices poses a significant risk as it will not just stoke inflation but also lead to higher outgo on government subsidies on cooking fuel.

"Nowhere in the world has seen any supply being stopped because of US strikes. Oil continues to flow as normal," an official said.

Sunday's price increase is the fourth straight day of retail prices going up. Since ‎January 2, petrol price has increased by 38 paise per litre while diesel rates have gone up 55 paise. Prices were unchanged over the new year. Rates of petrol have been on the upswing since December 26 and that of diesel since November 29, 2019. Diesel prices have increased by Rs 2.78 per litre over this period while petrol has become costlier by 91 paise.