Uche Cecil Izuora
India’s state-owned energy majors that trade in fuels have increased prices at the pump for the fourth time in the space of a month, reflecting the continued effect of the Strait of Hormuz closure on oil and fuel flows.
The cumulative price hike since the start of the month comes in at 8.6% for diesel fuel, Reuters reported today, and 7.8 per cent for gasoline.
The first fuel price hike took place in Mid-May, with refiners including Indian Oil Corp., Bharat Petroleum Corp, and Hindustan Petroleum Corp. hiking their retail prices by over 3% for the first time in four years.
Since the war in the Middle East began and cut off over 40 per cent of India’s crude oil flows, those that passed through the Strait of Hormuz, one of the highest-flying economies in Asia has seen its oil import bill soar, investors fleeing the capital market, and the local currency plunging to an all-time low against the U.S. dollar.
As a result, the world’s third-largest crude importer saw its wholesale inflation jump to 8.3% in April from a year earlier, significantly accelerating from 3.88 per cent annual inflation in March, driving wholesale fuel prices higher.
These surged in April, with gasoline prices up by 32.4 per cent and diesel prices up by 25.19 per cent.
That’s up from a monthly rise of 2.5 per cent for gasoline in March, and 3.62 per cent for diesel.
The government in New Delhi, meanwhile, has called for fuel conservation, including through working from home, carpooling, and using public transport instead of personal vehicles. The measures are urgently needed because, as international oil prices surge, so does India’s oil import bill, which in turn affects refiners’ bottom lines.
The oil and fuel import bill for March stood at $12.1 billion, The Banker reported this month, rising further to $18.6 billion in April, in a 53 per cent monthly jump. This month will likely see a further rise in oil import prices as benchmarks creep higher.