Mumbai: Crude oil prices soared past $70 a barrel for the first time since May 2019 after an attack on a Saudi Arabian oil facility on Sunday.
Oil prices had been on a free fall ever since March 2020 when Saudi Arabia and Russia, two leading crude producers of the world, failed to reach accord on curbing production. That plus the sinking demand in the Covid-19 scenario made crude prices nosedive steadily except minor intermittent fluctuations.
However, in parallel to Saudi Arabia and other producers slashing prices to prop up falling prices, came an attack on Sunday on a Saudi Arabian oil facility.
Analysts now forecast that this could push retail fuel prices also, triggering further increase in the already sky-high fuel prices in India. The only restraining factor for the central government will be the upcoming elections in five states starting end March.
In Delhi, petrol was sold at ₹91.17 per litre on Monday, while diesel retailed at ₹ 81.47. In Mumbai, petrol was at ₹97.57, while diesel retailed at ₹88.60, according to Indian Oil Corporation Ltd.
The late Sunday attack on the Saudi Arabian oil storage tank farm by Yemen's Houthi rebels sent jitters in the oil market about a curtailed availability in the face of higher summer demand in the coming months. Saudi Arabia accounts for about 10% of global crude supply and is the second-largest seller of oil to India.
In India, although crude prices fell in recent months, the government either kept taxes at the same level or increased, thus netting huge tax revenues that offered no insignificant relief to governments in a period of Covid-caused recession with falling tax revenues.
Now with the current surge in oil prices, governments, both at the Centre and states, will be in a fix about giving relief to people through tax deductions that will squeeze revenues.