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Our Bureau

Mumbai, Oct. 14 Even while crude touched $75 a barrel on Wednesday, oil sector executives in India reiterated there is no cause for alarm on the fuel pricing front.

“There could be some issues if crude were to cross $90 a barrel, but we do not see that happening for some time now. With the last price revision of petrol and diesel prices some months ago, we are comfortably placed even if crude were to inch towards the $85-mark,” an oil industry source said.

This is also borne by the fact that losses per litre on petrol and diesel are “at manageable levels” of less than Rs 3 even when they were threatening to get out of hand a couple of months ago. Sources say that the third quarter of this fiscal could see the public sector refining trio of IndianOil, Hindustan Petroleum Corporation and Bharat Petroleum Corporation actually posting profits on diesel.

The obvious question, therefore, is why are crude prices inching upwards when there is really no dramatic economic revival happening globally? It is only lately that experts are venturing to talk of a slight turnaround happening in parts of Europe and the US. This, by no stretch of imagination, should lead to crude prices heading north.

According to agency reports, crude oil prices have soared because of a weak dollar and the upcoming holiday shopping season that could bring more traffic to the roads.

A plunge in the dollar convinced many investors to pump money into crude and other commodities as a hedge against inflation. Some analysts also expect diesel fuel demand to rise soon as US truckers get in gear for the year-end holiday shopping season.

In the Indian context, the last fiscal was especially difficult for public sector refiners when crude touched $147 a barrel and the annual projected losses were close to Rs 250,000 crore. The three oil companies literally had their back to the wall and, at one point, were close to bankruptcy prompting tthe Centre to stepin with fuel price increases and oil bond issuance. “Last year was an aberration and we do not see anything that dramatic to happen this time around,” an executive said.

To put this in perspective, this fiscal’s second quarter losses on petrol, diesel, kerosene and cooking gas will be less than Rs 6,000 crore or just a tenth of last year’s projected losses at one stage.

It is in this context that the Centre could intervene only if crude heads towards the $95-a-barrel mark which will see yet another round of price increases in diesel and petrol, though these will be in the region of Rs 2 a litre.

More Stories on : Petroleum | Outlook | Economy | Forex | Bharat Petroleum Corporation Ltd

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