COIMBATORE: With the rupee falling to an all-time low against the dollar on Monday, prices of brent crude oil are estimated to have hit a new high in rupee terms. Brent crude oil prices, which moved up nearly 7% in the past two weeks to $108 per barrel due to the political unrest in Egypt and positive jobs data in the US, would now cost around Rs 6,500 per barrel -- a new high -- analysts tracking the sector said.
Crude oil prices for the Indian basket had moved up to $104.52 per barrel on July 8 compared to $101.24 per barrel in the second fortnight of June, data with the petroleum planning and analysis cell of the ministry of petroleum and natural gas showed. Though crude oil rates have advanced only by 3.2% during the period, prices have increased nearly 6.2% in rupee terms due to the sharp depreciation of the currency. Crude oil prices have increased to about Rs 6,381 per barrel compared to around Rs 6,010 for the period.
High oil prices are negative for public sector (PSU) oil firms as fuel under-recoveries, the difference between the market price of crude oil and the retail price at which petroleum products are sold, would increase further.
Since hitting lows of Rs 3.7 per litre in the first fortnight of May, under-recoveries on diesel have more than doubled to Rs 8.1 per litre, analysts at Nomura India said. The under-recoveries on diesel have increased despite the two price hikes of 50 paise per litre each in June and July. "We estimate diesel under-recoveries would escalate to nearly Rs 10 per litre in the first fortnight of July," the analysts said.
Under-recoveries on kerosene sold through the public distribution system and LPG have also increased to Rs 30.5 per litre and Rs 368.5 per cylinder, respectively. The under-recovery on sales of petroleum products is pegged at around Rs 360 crore ($60 million) per day in the second fortnight of June, the highest since the middle of March.
