India’s Concern Mounts as Crude Oil Nears $90 per Barrel: Oil Secretary Raises Alarm

India’s oil secretary, Pankaj Jain, has expressed concern over the upward trajectory of crude oil prices, which have surged towards the $90 per barrel mark. “Whenever prices go up, it does cause anxiety, cause concern,” Jain remarked. The Brent crude benchmark has soared to $89 per barrel, marking a $15 increase over the span of approximately four months.

Jain emphasized the uncertainty surrounding whether crude prices will plateau at $90. Given that India is the world’s third-largest importer of crude oil, importing 88% of its requirements, such price hikes pose significant challenges for the nation.

The long-term impact of sustained high prices remains a point of concern. Jain indicated that if elevated prices persist for a month or longer, companies will need to adapt accordingly.

Factors such as geopolitics and the traditional surge in summer demand are contributing to the price escalation. Recent events, such as the Israeli attack on the Iranian embassy in Syria, which resulted in casualties among senior Iranian military officials, have heightened tensions in the Middle East, potentially exacerbating the situation.

Additionally, the seasonal spike in fuel demand during the summer, driven by increased holiday travel and air conditioning usage, is further exacerbating the situation. Jain noted that historically, either crude prices or refining margins tend to increase during this period. However, this year, while crude prices have surged, refining margins have not followed suit.

India’s heavy reliance on imported crude underscores the importance of closely monitoring and responding to fluctuations in global oil markets. Refiners are expected to adjust domestic fuel prices in line with international rates. Following significant volatility in 2022, state oil companies temporarily halted regular price revisions. However, recent adjustments include a reduction of Rs 2 per liter in both petrol and diesel prices.