India announces the first-ever hike in fuel prices in four months. Petrol and Diesel will now cost 80 paise more, and Domestic LPG will cost Rs.50 more. Earlier, it was announced that bulk users would pay Rs.25 additionally for a litre of Diesel.
On Tuesday, discussing the price rise, opposition parties voiced their dissent against the fuel price hike. The Rajya Sabha was adjourned till noon following an uproar by some members.
Congress leader Rahul Gandhi mocked the price hike, tweeting, “Now the lockdown on fuel and gas prices has been lifted; the Government will keep developing the price.”
Though the price hike amounts to less than one percent of the current price, there are fears that fuel prices can increase by Rs.22 in the coming days or weeks.
The global crude oil price has been surging since Russia launched its “Special operation” in Ukraine. It even reached a high of $140 a barrel. However, the Government avoided any temptation to increase the price, apparently due to the state elections in five states.
The uncertainty over the Russian oil supply is pushing Brent’s price again after a slight fall. Markets are keenly watching any possible embargo on energy from Russia by the European Union.
The US has already announced a ban on oil and gas imports from the Russian federation. Now, American President Joe Biden’s visit to Nato, EU, and G7 summits could result in some commitments from European countries on cutting energy imports from Russia.
If the US succeeds in obtaining even a partial embargo on Russia’s oil and energy to Europe or pledges on cutting imports from Russia, global crude prices will significantly rise.
In such a scenario, countries like India, dependent on oil imports, can no longer contain oil prices in the local market. They will be forced to pass them on to consumers.
Reference: Press Trust of India