By Admin 
- Insurance and freight costs increased due to geopolitical crisis.
Brent & WTI Decline: There has been positive progress in the ongoing peace talks between America and Iran. With this, the market is hopeful that the ‘Strait of Hormuz’, which was closed for the last 3 months, will reopen and the supply of crude oil in the world will become normal.
After this news, the prices of Tej have fallen sharply in the international markets today. Global benchmark Brent crude fell 5.4% to $97.97 a barrel, while West Texas Intermediate was trading below $92.
This fall in crude oil prices is a matter of great relief for India, which imports more than 85% of its oil requirement. Here, amidst the falling prices of crude oil, government oil companies in India have increased the prices of petrol and diesel by about Rs 7.50 in the last 10 days. Of course, it is natural to think that the prices of petrol and diesel in the country will come down in the coming time, whereas in reality it is not so.
Why will the price of petrol and diesel increase?
According to the report of financial experts and Kotak Securities, the calculations of oil companies are still not correct amidst the rising prices of petrol and diesel in the country. The Iran-America war, which started on February 28, has brought down the prices of crude oil from $70 per barrel to $114 per barrel. Meanwhile, oil companies did not increase prices for 76 days and bore the burden of expensive imports.
Livemint’s financial experts say that since the start of the war in both the countries, there has been a huge jump of 39% in the cost of crude oil, whereas in comparison, the prices of petrol and diesel have been increased only by 3-7%. In such a situation, companies may have to theoretically increase prices by Rs 11-14 per liter to recover their entire losses.
This is also a reason for increasing prices
Another reason for the increase in the prices of petrol and diesel is that even though the prices of crude oil have fallen to the level of $ 98 per barrel today, the tension on Hormuz is still not completely over. Even if peace talks between America and Iran are successful, it will take time for the situation to become normal.
On top of this, due to this geopolitical crisis, the marine insurance premium and freight charges of oil tankers coming from America and Northern Europe have increased significantly. This will ultimately be compensated by increasing retail prices.
losses are still being incurred
Even after increasing the prices of petrol and diesel 4 times, oil companies are incurring a loss of Rs 10 per liter on petrol and Rs 13 per liter on diesel. Companies cannot bear the loss of such a huge amount on a daily basis for a long time, hence there is no other option left but to increase the prices to maintain financial stability.
Also read:
Petrol-Diesel Price Hike: Petrol-Diesel became costlier by more than Rs 7 in 10 days, are oil companies still in loss?