New Delhi: prices have risen above $80 a barrel for the first time in three years, increasing domestic fuel prices and triggering concerns about higher import bill, inflation, and current account deficit.
State-run fuel retailers raised prices of diesel by 25 paise per litre and of petrol by 20 paise per litre on Tuesday. In Delhi, diesel now costs Rs 89.57 and petrol Rs 101.39 per litre. Cooking gas prices are also likely to rise when companies revise rates at the beginning of October.
Oil price rise, 55% since the beginning of the year, is another sign of the energy crisis that has shaken the world. Coal prices have doubled in Asia and natural gas prices tripled in Europe and the US in a year. Asia-delivered spot LNG rates have gone up to $30 per mmBtu from under $2 at the beginning of the pandemic last year.
Depleting inventories, slow resumption of US supply hit by recent storms and some OPEC members’ inability to quickly ramp up production to meet their enhanced output quota due to under-investment last year have together contributed to a tighter market, as per analysts.
At the same time, economies are reopening with demand for transportation and industrial fuels expanding. Record-high gas and coal prices are also prompting consumers to switch to oil, creating additional demand. Goldman Sachs has forecast a price of $90 per barrel by year-end.