Oil rises by $3, Energy cos face Rs 27,000 crore burden


For Indian oil companies, which depend heavily on imports, high oil prices can be a crippling burden at a time when the government is reluctant to raise fuel prices.For Indian oil companies, which depend heavily on imports, high oil prices can be a crippling burden at a time when the government is reluctant to raise fuel prices. 

NEW DELHI: Oil prices jumped $3 a barrel, putting an annualised burden of Rs 27,000 crore on Indian energy firms, because of escalating hostility between Russia, which controls one of the biggest reserves of oil and gas in the world, and Ukraine, through which Russian gas is piped to Europe.

For Indian oil companies, which depend heavily on imports, high oil prices can be a crippling burden at a time when the government is reluctant to raise fuel prices sharply in the run up to elections.

Each $1 increase in crude oil price heaps the oil sector with a burden of Rs 9,000 crore a year. Brent crude, the main benchmark for global prices, climbed to this year’s peak of $112.10 per barrel while the US benchmark, WTI, rose to nearly $105 after Russian President Vladimir Putin declared he had the right to invade Ukraine. 

Analysts said US crude oil may touch $120 if the situation goes out of control. Russia has ignored Western pressure and mobilised forces after its parliament authorized Putin to use its military might to protect Russian citizens in Ukraine. Some analysts say this may be biggest stand off between Moscow and Washington since the days of the cold war.

SOURCE: http://economictimes.indiatimes.com/
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