Egypt crisis may lead to petrol price hike in India

Egypt crisis may lead to petrol price hike in India

Prepare for more increases in petrol prices in the coming days! After the falling rupee making a dent in your fuel bill regularly, Egypt’s political crisis could be the next to push up petrol costs.

Although Egypt is not an oil producer, analysts worry that Egypt's civil unrest could disrupt millions of barrels of oil that pass through the Suez Canal and cause delay in distribution. That is expected to drive oil prices upward in the days to come. Benchmark crude for August delivery traded at the highest since May, 2012, amid widespread protests in Egypt.

India is a net importer of crude oil and nearly 80 per cent of domestic oil requirement is fulfilled by import.

In June, state-owned oil marketing companies (OMCs) had already raised petrol prices thrice, by nearly Rs 5 a litre in total. Any increase on the back of that is sure to hit the consumers’ further.

But oil firms’ under-recovery or losses on sale of retail petrol has been increasing mainly due to depreciation in the rupee, coupled with increasing international petrol prices.
The Egypt crisis has disrupted the economy of oil further.

Losses are also mounting on the retail sale of diesel, but the government will in all likelihood defer any sharp increase in diesel prices for fear of losing public support ahead of this year’s Assembly elections in some states and the general election in 2014.