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Relief for refiners: Crude oil import prices fell below $100 in the 1st week of August

India’s average crude oil import price fell below $100 to $99.75 a barrel for the first time in the first week of August after rising sharply in March ($112.87) and peaking at $116.01 in June following the Ukraine war.

The development has brought some relief to refiners who have been suffering huge revenue losses from petrol and diesel sales in the domestic market, but an immediate reduction in pump prices of auto fuels is not visible as state-run oil companies are still bleeding heavily on diesel sales. , two people familiar with the development said they would not be named.

According to official data, India’s average petrol price benchmark fell 27% to $108.78 per barrel in the first week of August from an average monthly peak of $148.82 per barrel in June. Average diesel prices fell 24% to $129.72 in the first week of August from $170.92 a barrel in June.

A person quoted above said that while the loss of petrol sales revenue is almost nil, diesel is still selling almost. 10 liters less than the market price. Also, state-run companies have to recover earlier revenue losses from the sale of auto fuels as any fuel price hike has been paused for the past four months.

While public sector firms – Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) – are free to align the pump prices of petrol and diesel with their respective international norms, the government tacitly regulates fuel prices. Due to economic and political reasons.

IOC, BPCL, HPCL and the Ministry of Petroleum did not respond to an email query on the matter.

The three government agencies, which control 90% of the domestic fuel trade, have frozen pump prices of petrol and diesel from April 7 amid their daily pricing policy and rising inflation.

This has taken a toll on their bottom line. India’s largest refiner IOC has posted a net loss 1,993 crore in the first quarter of the current fiscal after posting a record net profit of Rs. 24,184 crore in 2021-22 and net profit 5,941 crore in the first quarter of the previous financial year.

HPCL on Saturday reported its highest ever quarterly net loss 10,196.94 crore as against net profit in Q1 ended June 30, 2022. 1,795 crore in the same period last year due to a freeze in automobile fuel prices, according to the company’s filing with the stock exchange.

BPCL, the other state-run oil marketing company, reported a net loss 6,290.80 crore compared to Saturday’s “restored” net profit in Q1 2022-23. 3,192.58 crore in the same quarter last year.

Commenting on the company’s financial performance, BPCL Finance Director Vetsa Ramakrishna Gupta said: “Despite a robust GRM [gross refining margin]The company reported a net loss in the first quarter due to heavy losses in the marketing business.

The second person mentioned above said fuel retailers are still wary of oil price volatility in the international market. “Global oil prices fell on demand concerns, but this gain may be temporary. We need to see the trend for a couple of weeks before concluding that international fuel prices have actually softened,” said a person working at a state-run oil company, asking not to be named.

Amid tight monetary policies in major economies, recession concerns in the UK and signs of demand weakness in China, benchmark Brent crude oil closed at a multi-month low of $94.92 a barrel on Friday.

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