India Hikes Fuel Prices for the Second Time in a Week

India’s state fuel traders raised retail prices for the second time in less than a week, as they seek to cushion the blow to margins from soaring crude prices while the war in the Middle East drags on with no resolution in sight.

Retail fuel prices in the country were hiked by the equivalent of $0.0093 per litre, Reuters reported. This is a third of last week’s price hike, which was the first in four years, highlighting the pain that the world’s third-largest crude oil importer is experiencing because of the developments in the Middle East.

The Economic Times reported earlier this month that wholesale fuel prices had surged in April, with gasoline prices up by 32.4% and diesel prices up by 25.19%. That’s up from a monthly rise of 2.5% for gasoline in March, and 3.62% for diesel.

Since the war in the Middle East began and cut off over 40% of India’s crude oil flows, those that passed through the Strait of Hormuz, one of the highest-flying economies in Asia has seen its oil import bill soar, investors fleeing the capital market, and the local currency plunging to an all-time low against the U.S. dollar. The squeeze in energy supply has been particularly acute in liquefied petroleum gas, but the oil crunch has also affected India’s economy.

As a result, the world’s third-largest crude importer saw its wholesale inflation jump to 8.3% in April from a year earlier, significantly accelerating from 3.88% annual inflation in March. Meanwhile, the United States again extended a sanction waiver on Russian crude for India, in acknowledgment of the difficult supply situation resulting from military action against Iran.

The Indian government, meanwhile, is urging people to travel less in order to conserve energy or use public transport and carpooling. India has 69 days’ worth of crude oil stocks and 45 days of LPG supply, according to the country’s oil minister.

By Irina Slav for Oilprice.com

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