The Prime Minister’s Office, the Union Finance Ministry, and the Oil Ministry held detailed talks on February 24 to discuss the current global oil prices, which have jumped in the backdrop of the crisis in Ukraine following Russia’s invasion.
The Prime Minister’s Office advised the Finance Ministry to reassess the current excise levels as oil marketing companies are at present absorbing losses at Rs 10 lakh per day on petrol and diesel, CNBC-TV18 reported.
The Oil Ministry informed the PMO and the Finance Ministry at the meeting held today about the losses being incurred by the OMCs.
The Finance Ministry will be doing an internal analysis on how much excise hit can be absorbed by the government. Notably, no decision has been reached on any excise duty cut yet.
The discussion has taken place at a time when benchmark Brent crude price has surged past $105 a barrel for the first time since 2014 after Russia's attack on Ukraine exacerbated concerns about disruptions to global energy supply.
After Russia launched an all-out invasion of Ukraine by land, air, and sea, the United States and Europe promised the toughest sanctions on Russia in response.
“If sanctions affect payment transactions, Russian banks and possibly also the insurance that covers Russian oil and gas deliveries, supply outages cannot be excluded,” said Commerzbank analyst Carsten Fritsch.
Brent crude rose $8.24, or 8.5 percent to $105.08 a barrel at 1045 GMT (4:15 PM). US West Texas Intermediate (WTI) crude jumped $7.78, or 8.5 percent to $99.88. Brent and WTI hit their highest since August and July 2014, respectively.
“Russia is the third-largest oil producer and second-largest oil exporter. Given low inventories and dwindling spare capacity, the oil market cannot afford large supply disruptions,” said UBS analyst Giovanni Staunovo.
“Supply concerns may also spur oil stockpiling activity, which supports prices.”
Meanwhile, Moody's Investors Service has raised India's growth forecast to 9.5 percent for the calendar year 2022 and to 8.4 percent for the coming fiscal beginning April 1, even as it has flagged high oil prices and supply distortions as a drag on growth.(With inputs from agencies)