INSUBCONTINENT EXCLUSIVE:
Fuel prices may rise after assembly elections end next week, says a report by JP MorganNew Delhi: After remaining stable for months, petrol
and diesel prices may see a hike after assembly elections come to an end next week, says a JP Morgan reportFuel prices may be hiked to
bridge the Rs 9 a litre gap created by surging international crude prices, which have gone past the $100 per barrel."With state elections
getting over next week, we expect daily fuel price hikes to restart across both gasoline and diesel," JP Morgan said in a report.The seventh
and final phase of polling for the Uttar Pradesh assembly elections is to be held on March 7 and the counting of votes for all the elections
held earlier in Uttarakhand, Punjab, Goa and Manipur is slated to take place on March 10.International crude oil prices shot above $110 a
barrel for the first time since mid-2014 on fears that oil and gas supplies from energy giant Russia could be disrupted, either by the
conflict in Ukraine or retaliatory western sanctions.The basket of crude oil India buys, rose above $102 per barrel on March 1, the highest
since August 2014, according to information from the Petroleum Planning and Analysis Cell (PPAC) of the petroleum ministry
This compares to an average of $81.5 per barrel price of the Indian basket of crude oil at the time of freezing of petrol and diesel prices
in early November last year.State-owned fuel retailers Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan
Petroleum Corporation Ltd (HPCL) are making a loss of Rs 5.7 a litre on petrol and diesel
This is without taking into account their normal margin of Rs 2.5 per litre.The brokerage said for oil marketing companies to revert to
normalised marketing margins, retail prices need to increase by Rs 9 a litre or 10 per cent."We expect a combination of small excise duty
cuts (Rs 1-3 per litre) and retail price hikes (Rs 5-8 a litre) to reflect the pass-through of $100 per barrel oil," the report
About a third of Russian gas supplies to Europe usually travel through pipelines crossing Ukraine.But for India, Russian supplies account
for a very small percentage
While India imported 43,400 barrels per day of oil from Russia in 2021 (about 1 per cent of overall its imports), coal imports from Russia
at 1.8 million tonnes in 2021 made up for 1.3 per cent of all coal imports
India also buys 2.5 million tonnes of LNG a year from Gazprom of Russia.While supplies at the moment seem to be of little worry for India,
it is the prices that are a cause of concern.Domestic fuel prices - which are directly linked to international oil prices as India imports
85 per cent of its oil needs - have not been revised for a record 118 days in a row.Petrol costs Rs 95.41 a litre in Delhi and diesel is
This price is after accounting for the excise duty cut and a reduction in the VAT rate by the state government.Before these tax reductions,
petrol price had touched an all-time high of Rs 110.04 a litre and diesel came for Rs 98.42
These rates corresponded to Brent soaring to a peak of $86.40 per barrel on October 26, 2021
Brent was $82.74 on November 5, 2021, before it started to fall and touched $68.87 a barrel in December.Though JP Morgan sees oil coming
down to $86 a barrel by the October-December quarter, it can hit $150 in a scenario of Russian Energy exports coming to a halt."To
summarise, in the event of completely shutting Russian oil supply (that is partially offset by a resumption of Iran exports and the use of
strategic oil reserves), crude oil was forecasted to rise to $150 per barrel."However, in the event sanctions spared energy transactions but
were intensified in other areas, our baseline view was that crude prices would rise to average $110 in 2Q22 (April-June) with prices spiking
