: Rs 12 hike in petrol, diesel needed to manage: ICICI #FinanceIndia #StockMarketNEWS #Business New Delhi: Petrol and diesel prices, which have been on a freeze for the past four months in view of assembly

@StockMarketNEWS Mon 07 Mar, 2022

Posted in: #FinanceIndia #StockMarketNEWS #Business

Rs 12 hike in petrol, diesel needed to manage: ICICI #FinanceIndia #StockMarketNEWS #Business
New Delhi: Petrol and diesel prices, which have been on a freeze for the past four months in view of assembly elections in states like Uttar Pradesh, need to be increased by over `12 per litre by March 16 for fuel retailers to break even.

International crude oil prices shot above US$ 120 a barrel for the first time in nine years on Thursday before retreating a little to US$ 111 on Friday, but the gulf between cost and retail rates has only widened.

With international oil prices on which domestic fuel retails are directly benchmarked spiking in the last two months, state-owned fuel retailers “need a massive price hike of `12. 1 per litre on or before March 16, 2022, just to breakeven and a price hike of `15. 1 is required??? after including margins for oil firms, ICICI Securities said in a report.

The basket of crude oil India buys rose to US$ 117. 39 per barrel on March 3, the highest since 2012, according to information from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry. This compares to an average of US$ 81. 5 per barrel price of the Indian basket of crude oil at the time of freezing of petrol and diesel prices in early November last year.

“With state elections getting over next week, we expect daily fuel price hikes to restart across both gasoline and diesel,??? JP Morgan said in a report.

The seventh and final phase of polling for the Uttar Pradesh legislative assembly is on March 7 and the counting of votes is slated for March 10.

“Auto fuel net marketing margin is minus `4. 92 per litre on March 3, 2022, and `1. 61 in Q4 FY22-to-date,??? ICICI Securities said. “However, net margin is likely to plummet to minus `10. 1 per litre on March 16 and minus `12. 6 on April 1 at latest international auto fuel prices. ???

The brokerage said, “steep price hikes are required as the strength in gross refining margins does not suffice for sharp quarter-on-quarter fall in net auto fuel marketing margin???.

Oil prices have been on the boil ever since Russia put its forces on the Ukraine border last month. They spiked after it invaded the central Asian nation on fears that oil and gas supplies from energy giant Russia could be disrupted, either by the conflict in Ukraine or retaliatory western sanctions.

Russia makes up for a third of Europe’s natural gas and about 10% of global oil production. About a third of Russian gas supplies to Europe usually travel through pipelines crossing Ukraine.

But for India, Russian supplies account for a very small percentage. While India imported 43,400 barrels per day of oil from Russia in 2021 (about 1% of overall its imports), coal imports from Russia at 1.