Petrol prices are likely to go up further despite three hikes in June, which have almost negated the four reductions this year that had brought down the rates to Rs. 63 at the beginning of May.
So far the sustained increase in fuel prices was on account of the sharp depreciation in the rupee, which hit a record low last week. However, Egypt's unfolding political crisis has emerged as the latest trigger that may send fuel bills northwards.
Benchmark crude for August delivery traded at the highest since early May last year amid widespread protests in Egypt for President Mohamed Mursi's resignation.
Egypt is not an oil producer but its control of the Suez Canal - one of the world's busiest shipping lanes, which links the Mediterranean with the Red Sea - gives it a crucial role in maintaining global energy supplies.
The rupee's fall below 60 today will further weigh on fuel prices as oil marketing companies have to pay for crude in dollars.
In June, petrol prices were hiked thrice as falling rupee made imports costlier. Oil firms had on June 1 raised prices by 75 paisa, excluding VAT, and followed it with a Rs. 2 per litre increase on June 16. On June 28, petrol prices were hiked by Rs. 1.82 a litre. The government deregulated petrol prices in June 2010.
Diesel price, too, were hiked by 50 paise per litre earlier this month in accordance with the government mandate for small doses of increases every month till entire losses on the fuel are wiped out.
Despite the sixth increase in diesel rates, oil firms are losing Rs. 8.10 per litre on the nation's most consumed fuel.
"Under-recovery on sale of retail diesel has been steadily increasing mainly due to depreciation in rupee coupled with increasing international prices. Even after the aforesaid increase, there shall still be an under-recovery (loss) on retail diesel of Rs. 8.10 per litre," Indian Oil Corporation, India's biggest refiner said in a statement.
Oil stocks were down sharply, partly on profit taking after recent gains. IOC traded 3.7 per cent lower at Rs. 227.80, while BPCL declined 3.4 per cent to Rs. 359.20 as of 11.30 a.m.
"Crude oil prices rallied up, and now some airline shares are down quite significantly," said Dickie Wong, executive director of research at Kingston Securities Ltd. in Hong Kong.
Airlines are most immediately affected by changes in energy prices since fuel accounts for a large share of their expenses, but a sustained rise in oil prices could have a ripple effect on the global economy which is already beset by a recession in Europe and a shaky recovery in China.
Aviation stocks traded lower in India too. Budget carrier SpiceJet traded 2.5 per cent lower at Rs. 27.65, while grounded carrier Kingfisher fell over 1 per cent.
(With inputs from agencies)
Source: ndtv pROFIT
So far the sustained increase in fuel prices was on account of the sharp depreciation in the rupee, which hit a record low last week. However, Egypt's unfolding political crisis has emerged as the latest trigger that may send fuel bills northwards.
Benchmark crude for August delivery traded at the highest since early May last year amid widespread protests in Egypt for President Mohamed Mursi's resignation.
Egypt is not an oil producer but its control of the Suez Canal - one of the world's busiest shipping lanes, which links the Mediterranean with the Red Sea - gives it a crucial role in maintaining global energy supplies.
The rupee's fall below 60 today will further weigh on fuel prices as oil marketing companies have to pay for crude in dollars.
In June, petrol prices were hiked thrice as falling rupee made imports costlier. Oil firms had on June 1 raised prices by 75 paisa, excluding VAT, and followed it with a Rs. 2 per litre increase on June 16. On June 28, petrol prices were hiked by Rs. 1.82 a litre. The government deregulated petrol prices in June 2010.
Diesel price, too, were hiked by 50 paise per litre earlier this month in accordance with the government mandate for small doses of increases every month till entire losses on the fuel are wiped out.
Despite the sixth increase in diesel rates, oil firms are losing Rs. 8.10 per litre on the nation's most consumed fuel.
"Under-recovery on sale of retail diesel has been steadily increasing mainly due to depreciation in rupee coupled with increasing international prices. Even after the aforesaid increase, there shall still be an under-recovery (loss) on retail diesel of Rs. 8.10 per litre," Indian Oil Corporation, India's biggest refiner said in a statement.
Oil stocks were down sharply, partly on profit taking after recent gains. IOC traded 3.7 per cent lower at Rs. 227.80, while BPCL declined 3.4 per cent to Rs. 359.20 as of 11.30 a.m.
"Crude oil prices rallied up, and now some airline shares are down quite significantly," said Dickie Wong, executive director of research at Kingston Securities Ltd. in Hong Kong.
Airlines are most immediately affected by changes in energy prices since fuel accounts for a large share of their expenses, but a sustained rise in oil prices could have a ripple effect on the global economy which is already beset by a recession in Europe and a shaky recovery in China.
Aviation stocks traded lower in India too. Budget carrier SpiceJet traded 2.5 per cent lower at Rs. 27.65, while grounded carrier Kingfisher fell over 1 per cent.
(With inputs from agencies)
Source: ndtv pROFIT
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