The petrol and diesel prices that remined stable since a month due to Lok Sabha elections are said to be witness sharp hike immediately after polls. Earlier, oil prices had become a frenzied topic of discussion in India as prices kept escalating almost daily.
Since last few months, even international oil prices were also almost stable. That makes a great relief to Narendra Modi government ahead of Lok Sabha polls avoiding steep hike in oil prices.
However, US president Donald Trump decision to lift waivers granted earlier to eight countries, including India, on importing oil from Iran. China and India are major oil importing countries from Iran. This force Indian oil companies to increase oil prices upto Rs 10 per liter after poll results.
India’s oil requirements are being met by exports upto 80 per cent, of which 10 per cent from Iran. Trump decision is bound to increase international oil prices also, which are not at $ 74 per barrel.
Analysts observing oil market trends say international crude prices will jump to 80-85 dollar/barrel in short-term after Trump’s fresh diktat. The order could significantly disrupt importing needs of non-oil producing countries, added experts.
India imported around 24 million tonnes of crude oil in the financial year ending 2018-19 from Iran and is one of the biggest importers of crude oil from the Middle Eastern country.
Now, India will now be forced to look at other nations such as Saudi Arabia, Kuwait, UAE, and Mexico to fulfil its oil requirements.
But New Delhi has grown fond of Iran as an oil supplier as it offers a 60-day credit period, free insurance and shipping, allowing domestic oil PSUs to keep fuel prices in check.
Meanwhile, a rise in global crude oil prices will also lead to an increase in demand for the US dollar, thus hurting the Indian currency on the rupee-dollar exchange. It could also take a heavy toll on India’s domestic equity market.