JOIN USCrude at $100 a barrel: What it means for the Indian consumer
Fuel prices, propelled by inflation, international politics and related policies are likely to get costlier as Brent crude hit a high note on Thursday.
After weeks of speculation over escalating tensions between Ukraine and Russia—that subsequently led to the oscillation of oil prices—the price of Brent crude hit $100 per barrel as Russia started its 'military operation' in Ukraine. This is a seven-year high.
Crude and related products account for over 9 per cent of the Wholesale Price Index, due to which a spike in Brent crude prices will worsen inflation in India. Subsequently, prices of LPG, CNG and even electricity may see a spike as Russia accounts for around 17 per cent of the global natural gas production.
Mainly, the spike in crude prices is driven by fears of a global shortage, as Russia is the world's second-largest oil producer.
A knockdown effect of high crude prices would be felt in the cost of petrol and diesel across India, surpassing the record high prices witnessed over 2021, as oil accounts for around 25 per cent of India's total imports, with over 80 per cent of oil imported in the country.
Fuel prices have remained high in India—except for a dip last November when the Centre cut excise on petrol and diesel—amid lockdowns and demand dips. With most states easing curbs and India limping towards normalcy, the price hike will be felt hard.
However, the Brent prices were averaging between $70 and $80 per barrel over the last year. Despite a fall in prices not trickling down to the consumers, a hike in the prices will most definitely be passed down the ladder.
Further, the rupee has also worsened against the dollar over the past two months, which compounds the pricing by making it more expensive.
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