Falling Re may not affect oil bill

The rupee had actually appreciated in August, when Brent crude prices were reigning at $18 per barrel, compared with the current price of $20. Dubai crude, used widely by refineries at home, is estimated to be selling for roughly $19 a barrel at present.

Crude prices, which set the benchmark for product prices, began rising only last month. The Oil Coordination Committee (OCC) had pegged diesel prices (now available at import parity prices) to international rates prevailing in September, enabling it to knock down at least five paise from last month’s retail price of roughly Rs 10 a litre earlier this month.

The rising oil prices in the global market do not bode well for diesel, naphtha, bitumen and paraffin wax consumers, who will now have to buy the petroleum products at rates in parity with import prices. The oil bill, however, say sources in the industry, may not suffer because the bulk of the oil imports had been tied up at lower rates than what OCC had budgeted for at the beginning of the current fiscal. Since 60 per cent of the crude oil and petroleum products imports are through term contracts, the prevailing spot prices will have less of an impact on the 40 per cent of crude and petroleum products that are yet to be imported. Canalising agency Indian Oil plans to import 33 million tonnes of crude oil this year – which is almost the same as what it had imported last year. Petroleum product imports will be a little higher this year at 24 million tonnes.