Fuel prices may rise further if US-Iran war persists
What's the story
Bharat Petroleum Corporation Ltd.'s (BPCL) HR Director Raj Kumar Dubey has warned that another increase in fuel prices may be unavoidable if global energy disruptions continue. He said policymakers are considering three options: raising retail fuel prices, oil companies absorbing losses, or government funding through deficit financing. His comments come amid sustained volatility in crude markets and rising pressure on fuel retailers due to increasing crude oil prices.
Market outlook
Price hikes initially viewed as temporary
Dubey observed that global price hikes of 20% to 50% were initially seen as temporary. However, he now believes these disruptions could persist for a longer period. He attributed this to the destruction of energy infrastructure amid the ongoing West Asia conflict. "So with this current scenario, if this scenario continues, then I think another price hike should be there," he said.
Price adjustments
Petrol, diesel prices hiked for 3rd time this month
Dubey's comments come just days after state-run oil companies raised petrol and diesel prices for the third time this month. The latest revision saw petrol in Delhi costing ₹99.51 per liter and diesel priced at ₹92.49 per liter. Despite these hikes, oil companies are still facing under-recoveries of around ₹13 per liter on petrol and ₹38 per liter on diesel due to crude prices remaining above $100/barrel.
Supply strategy
India has avoided fuel shortages by diversifying oil imports
Dubey emphasized that India has avoided fuel shortages by diversifying its oil imports, despite disruptions around the Strait of Hormuz. He said Indian energy companies have expanded their sourcing network from 20 to 40 supply points, including Russia. This diversification has provided enough security for India's fuel consumption, which has increased even during conflict periods without creating shortages.
Energy shift
Crisis to speed up India's transition toward cleaner energy sources
The ongoing crisis is also expected to speed up India's transition toward cleaner energy sources. Dubey highlighted the government's plan to increase natural gas' share in India's energy mix from 7-8% to 15%. He also noted a greater focus on compressed biogas (CBG), ethanol blending, and hydrogen fuel. "Accelerating our efforts toward hydrogen as a fuel, as a very sustainable fuel for the future... these are some of the things we need to do," he added.