International crude oil prices have touched an all-time record high of $147.27 a barrel on the New York Mercantile Exchange (NYMEX) on Friday. India, which imports nearly 80% of its crude oil requirements, may see a major jump –of nearly 76%?in its oil import bill for 2008-09 at these prices.
State-owned oil marketing companies (OMCs)?Indian Oil, BPCL and HPCL?fear that this uptrend may cast a major impact on their profits, which may even see complete erosion during the fiscal. OMCs have already initiated supply side management measures as regards supply of petroleum products to dealers in the domestic market.
Traders have attributed this uptrend in crude oil prices to the ongoing tensions in Iran, the second-largest producer of Organization of Petroleum Exporting Countries (OPEC), and a possible revival of oil-related violence in Nigeria.
Prices of crude oil had fallen $10 over in the first two days of the week beginning July 7 but rebounded on Friday to cross the $147 a barrel mark at NYMEX following threat of supply disruptions. In London, August Brent crude rose by $3.34 to $145.37 a barrel in the futures trading.
In response to Iran?s missile test, the US secretary of state Condoleezza Rice warned the Tehran that the United States will defend its allies. Iran then responded with another missile launch, drawing buyers back to jittery energy markets.
On its part, the OPEC has warned that it cannot replace the shortfall if Iran is attacked and takes its crude supplies off the market. The fear is that Iran could block the Strait of Hormuz, a passageway that handles about 40% of the world?s tanker traffic.
The continuous uptrend in crude oil prices along with growing inflation is bound to cast its impact on India?s economic growth, which is expected to slow down to 8%. Petroleum secretary M S Srinivasan had recently stated that India?s crude import bill, at the current prices may jump by up to 76% to $110-120 billion this year. In 2007-08, the oil import bill was $67.988 billion and the country had imported 121.672 million tonnes of crude. This year, the import would be higher because Reliance Petroleum?s export oriented 29 MT refinery is set for commissioning in August-September.