Rising global crude prices could trigger further fuel price hikes in India, with economists and market experts warning that the recent increase in petrol and diesel prices may only be the beginning.
Speaking on NDTV, Neelkanth Mishra said fuel prices may need to rise significantly further for oil marketing companies to recover costs amid elevated global energy prices.
“Rs 3 is just the start,” Mishra said, referring to the recent retail fuel price hike.
“Our expectation is that there needs to be at least another Rs 15 per litre increase and perhaps the government will raise that over a period of time.”
Mishra noted that global oil prices have surged by nearly $30-$35 per barrel, while refining margins have also expanded sharply. However, he pointed out that India's surplus refining capacity has partly cushioned the domestic impact compared with countries that depend heavily on imported refined fuels.
“Countries that do not have adequate refining capacity have had to raise prices by much, much more than India needs to,” he said.
Mishra added that multiple estimates suggest petrol and diesel prices may ultimately need to rise by Rs 18-30 per litre for oil marketing companies to break even.
However, Samir Arora argued that the burden of elevated oil prices should not be seen as falling solely on oil marketing companies.
“It is very unfair to put all these Rs 1,000 crore-a-day losses saying that these oil companies are losing money,” Arora said on NDTV.
“India is losing Rs 1,000 crores a day, and that is nothing actually.”
According to Arora, the cost burden should be shared across stakeholders including upstream oil producers, the government, oil marketing companies and consumers.
“Four players should bear this — oil-producing companies like ONGC, the government through lower taxes, oil marketing companies themselves and finally the public through some pass-through,” he said.
Arora also suggested that India's macroeconomic position remains manageable despite the energy shock, arguing that the economy can absorb the impact over time.
The discussion comes amid concerns that sustained geopolitical tensions and elevated crude oil prices could fuel inflationary pressures in India.
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