Report By Aman Kumar Singh.
NOIDA: It has been 32 days since the war between Russia and Ukraine and its biggest impact is visible on crude oil prices. The prices of crude oil in the international market have been on fire for some time amid Western countries imposing sanctions on Russia. On Monday, the price of crude oil saw the biggest jump since 2008 and its price crossed $ 139 a barrel.
Rose by 10 dollars on Monday
Western countries are continuously intensifying their sanctions on Russia against Russia’s attack on Ukraine. The United States and European allies are considering imposing sanctions on imports of Russian oil. Due to this, Brent reached $ 139.13 per barrel and WTI reached $ 130.50. In the early hours of Monday, the price of crude oil suddenly rose by $10 and touched a 14-year high. Significantly, in the year 2008, crude oil reached $ 147 per barrel.
Preparations for sanctions on Russia’s oil supply
US Secretary of State Antony Blinken said on Sunday that talks are underway between the US and its allies about imposing sanctions on imports of oil and natural gas from Russia. He said President Joe Biden held his National Security Council meeting on the subject the day before. In addition, Speaker of the US House of Representatives Nancy Pelosi said in a letter that the House is currently looking for stronger legislation that would further isolate Russia from the global economy. The remarks came as pressure mounted on the White House and other Western countries to take tough action against Moscow over its invasion of Ukraine.
The main reason for the rise in crude oil
Talking about the main reason for this rise in crude oil, due to the intensifying war between Russia and Ukraine, America, Europe and allied countries have made up their mind not to buy oil from Russia. Due to this, the supply fell short of the demand and the crude oil boomed and reached its highest level since 2008. Let us inform here that Russia is the second largest oil producer in the world. Significantly, Russia has intensified Ukraine power attacks and there have been a large number of casualties in this war.
Russia second largest oil producer
Significantly, since Putin’s declaration of war, the fear of disruption in energy exports had increased, which is now clearly visible. Let us tell you that Russia is the second largest oil producer in the world, which mainly sells crude oil to European refineries. The countries of Europe take more than 20 percent of their oil from Russia. In addition, Russia produces 10 percent of the world’s copper and 10 percent of aluminium in global production.
Crude oil may reach $185
According to experts, if the war between Russia and Ukraine progresses further, the price of crude oil can reach $ 185 per barrel. Let us tell you here that if the price of crude oil increases by one dollar at the international level, then the price of petrol and diesel in India increases by 50 to 60 paise. In such a situation, due to reduced production and supply interruption, its price is sure to rise and it is expected that due to the crude oil crossing $ 150 per barrel, the prices of petrol and diesel in India will increase by Rs 15 to 22. However, experts also say that this increase in the price of oil cannot be done at once, but little by little, in several days.
Big impact will be visible on India
Significantly, the price of crude oil in the international market has reached a high of $ 139 per barrel in the last 14 years. Despite the increase in crude oil prices, the prices of petrol and diesel in the country have remained the same for the last four months. In such a situation, the oil companies are facing heavy losses. In a recent ICICI Securities report, on the increasing losses of domestic oil companies, it has been said that due to the sharp rise in global crude oil prices in the last two months, the government-owned retailers have suffered heavy losses and now companies are preparing to put the burden on the people of the country to reduce it.
Petrol can be costlier by Rs 15
Many reports are coming out about the increase in the prices of petrol and diesel in the country. According to these reports, within the coming two-four days, the price of petrol and diesel in the country can be increased by Rs 15 to 22 respectively. In fact, the report said that domestic oil companies will have to increase the prices of petrol and diesel by Rs 12.1 per litre on or before March 16, 2022, only to compensate for the cost. Adding the margin(profit)too, they will have to increase the price by Rs 15.1 per litre. Obviously, if the oil companies make this increase, then it will be a big blow for the common people of the country.
85% crude oil imports
Significantly, India is a major importer of crude oil and it buys more than 85 percent of its crude oil from outside. India has to pay the cost of imported crude oil in US dollars. In such a situation, due to the increase in the price of crude oil and the strengthening of the dollar, the prices of petrol and diesel are affected at the domestic level, that is, the fuel starts becoming expensive. If the price of crude oil increases in the international market, then obviously India’s import bill will increase. A report has expressed hope that India’s import bill may cross $ 600 billion.
(Aman is student of BA-JMC first year from Maharishi University of Information Technology, Noida)