International crude oil prices rose to near $100 a barrel on Tuesday as Russian President Vladimir Putin dispatched troops to Ukraine, but petrol and diesel prices in India remain frozen, with costs expected to climb until assembly elections in places such as Uttar Pradesh are completed.
Fearing that supplies will be hampered as a result of Russian aggression, the price of Brent crude oil futures for April delivery on London’s ICE surged 4.18 percent to $99.38 per barrel on Tuesday morning, before settling slightly above $98. Brent last surpassed $99 per barrel in September of 2014.
Russia produces a third of Europe’s natural gas and around ten percent of the world’s oil. Approximately a third of Russian gas shipments to Europe pass through Ukraine via pipelines.
Crude oil may see rise due to Russia-Ukraine Conflict
Russian goods, on the other hand, account for a very minor percentage of India’s imports. In 2021, India imported 43,400 barrels per day of oil from Russia (about 1% of total imports), while coal imports from Russia totaled 1.8 million tonnes, or for 1.3 percent of total coal imports. India purchases 2.5 million tonnes of LNG per year from Russia’s Gazprom.
While supplies appear to be of little concern to India at the time, it is the costs that are causing anxiety. Domestic fuel costs, which are directly related to global oil prices, have remained unchanged for an unprecedented 110 days.
State-owned gasoline retailers IOC, BPCL, and HPCL froze pricing as soon as campaigning for a new government in Uttar Pradesh, Punjab, and three other states began. Retail pump prices are set at $82-83 a barrel, and industry executives expect them to rise once the elections are over next month. In Delhi, a litre of petrol costs 95.41 rupees, while a litre of diesel costs 86.67 rupees. This price includes the state government’s reduction in the VAT rate and the reduction in excise charge.
Prior to these tax cuts, the price of gasoline had reached an all-time high of 110.04 per litre, while diesel was priced at 98.42. Brent soared to a high of $86.40 a barrel on October 26, 2021, as a result of this pricing. Brent was $82.74 per barrel on November 5, 2021, before falling to $68.87 per barrel in December. Prices, on the other hand, began to grow after that and increased by 12% in February alone, according to them.
Prices of gasoline and diesel have been frozen in the past before important elections
Despite worldwide crude oil prices rising by approximately $5 per barrel, there was a 19-day price freeze on petrol and diesel ahead of the Karnataka elections in May 2018. However, as soon as the elections were done, oil companies quickly passed on the planned rise to customers – over a 16-day period following May 14, 2018. Following the increase, the price of gasoline increased by 3.8 cents per litre and the price of diesel increased by 3.38 cents per litre.
They also postponed increasing fuel prices for over 14 days before the Gujarat assembly elections in December 2017. Between January 16, 2017, and April 1, 2017, when assembly elections were held in five states – Punjab, Goa, Uttarakhand, Uttar Pradesh, and Manipur — these corporations also enforced a price freeze on gasoline and diesel.
According to industry sources, they mitigated the revision during the 2019 General Elections by not passing on all of the intended rate increases to consumers. The prices began to soar the day after the Lok Sabha elections’ final phase of voting was completed. Since the adoption of daily fuel price modification in June 2017, the current 110-day break is the longest. Between March 17, 2020, and June 6, 2020, there was an 82-day pause in rate revisions.
Following an 82-day pause in rate revisions in 2020, the government increased excise duty on gasoline and diesel by 3 cents per litre apiece to offset gains from lower international rates. On May 6, 2020, the government increased excise charges by ten cents per litre on gasoline and thirteen cents per litre on diesel.