Saudi Arabia's Aramco has ensured undisrupted oil supply to India, Petroleum Minister Dharmendra Pardhan said Monday after a weekend attack on the Saudi's largest oil processing plant.
"Top executives of Aramco have been contacted. Indian ambassador in Riyadh has contacted the senior management of Aramco to ensure a steady supply to India,” Pradhan said amid a double-digit rise in crude oil prices on Monday.
He said he has also reviewed the September oil supplies with the state-owned oil management companies and is closely monitoring the evolving situation in the Middle East.
Saudi Arabia supplies 1 million per day to global oil consumers and is the second-largest supplier to India after Iraq.
Brent crude futures rose over 19% to trade at $71 a barrel in Asia. This was the biggest gains in percentage terms since 1991.
India, which is a net importer of crude oil and ships 80% of its requirement from abroad, can be impacted in many ways.
While the first round impact can be felt on the petrol and diesel prices, in the second round prices of all other commodities could be jacked up through a jump in transportation cost.
A $10 jump in crude oil prices will force the oil companies to hike petrol and diesel prices by up to Rs 6 per litre. A prolonged hike in oil can put pressure on refining margins of the domestic companies too.
Besides, a back-of-the-envelop calculation suggests that every dollar rise in crude prices increases India's import bill by $1.5 billion and every $10 rise impacts the economic growth of the country by up to 40 basis points.
India's economy has slowed to a 6-year low of 5% in the April-June period of 2019-20 and the country can ill-afford to grow lower than 8% if it wants to be a $5 trillion economy by 2024-25.
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