Global crude oil prices crossed $100 per barrel on Thursday, raising concerns about petrol and diesel prices in India.
For now, there is no change in fuel prices at petrol pumps. But experts say that if crude oil prices stay high for a long time, it may become difficult to keep prices unchanged.
India depends heavily on imported crude oil. So when global prices rise, the extra cost has to be managed by oil companies, the government, or passed on to consumers.
However, a sudden one-day increase in crude prices does not mean petrol prices will go up immediately. Oil companies usually manage short-term changes using existing stock and internal adjustments.
The real concern begins if crude oil stays near or above $100 for several weeks.
Manoranjan Sharma, Chief Economist at Infomerics Ratings, said that if crude reaches $100, the situation may become difficult to handle for long. He explained that oil companies cannot absorb losses beyond ₹3–₹4 per litre for too long without support or price hikes.
At present, oil marketing companies are already facing pressure. Arun Kailasan from Geojit Investments said that at around $95 per barrel, companies were already facing losses of about ₹1,600 crore per day.
He added that most financial buffers are now almost used up, making it hard to continue without increasing prices or getting help from the government.
Experts say the situation depends on how long crude oil prices remain high. Puneet Singhania from Master Capital Services said that the real problem starts when prices stay above $100, as profits shrink and cash flow becomes tight.
Right now, there is no official announcement of a price hike. But if crude oil prices stay high, the government and oil companies may have to take steps such as increasing fuel prices, reducing taxes, or continuing to bear losses for some time.
Manas Majumdar from PwC India said that the financial cushion built by oil companies in the past may last only three to four months if prices remain high.
In simple terms, petrol and diesel prices may not rise immediately. But if crude oil prices stay high, especially above $90–$100, an increase in fuel prices in India is likely in the coming time.
