With Russian imports, crude oil prices at 2010-11 level but no benefit to consumers

If one looks at the average prices of the Indian basket of crude oil, it has come down significantly, from an average price of $116 per barrel in June 2022 to just $84 per barrel in March this year, a drop of over 27% but it has not benefited Indian consumers as they continue to pay high retail prices for petrol and diesel.

New Delhi:India’s decision to buy Russian crude oil at a discounted price has seen a lot of protest from western countries that have imposed several sanctions on Russia and Russian companies and tried to dissuade India from buying cheap crude oil from the country after it waged war against Ukraine in February last year. As expected, India defended its decision of buying cheap Russian crude oil, saying it is essential for the country’s energy security but the data suggests that neither purchase of crude oil from Russia at a discounted price nor a continuous decline in Brent crude prices over the last 8 months have benefitted Indian consumers.

If one looks at the average prices of the Indian basket of crude oil, it has come down significantly, from an average price of $116 per barrel in June 2022 to just $84 per barrel in March this year, a drop of over 27% but it has not benefited Indian consumers as they continue to pay high retail prices for petrol and diesel. In fact, as per the data available with the Petroleum Planning and Analysis Cell under the Ministry of Petroleum and Natural Gas, the average price of the Indian basket of crude oil was $84 per barrel as on March 6. This average price of crude oil for the Indian basket is comparable to the average price of crude oil for the Indian basket during 2010-11.

As per the official data, the retail price of petrol in Delhi was Rs 47.93 per litre and Diesel’s per litre price was just Rs 38.10 per litre as on April 1, 2010. A year later, the retail price of petrol in Delhi was Rs 58.37 per litre and Diesel’s retail price in Delhi was just Rs 37.75 per litre as on April 1, 2011. As per the data available with the Ministry of Petroleum and Natural Gas, the average price of the Indian basket of crude oil for the financial year 2010-11 was $85.09 per barrel.

Though the current price of the Indian basket of crude oil in March this year is comparable to the average price of the commodity during FY 2010-11, Indian consumers are paying nearly Rs 100 per litre for petrol and Rs 90 per litre for diesel in the national capital Delhi. The data shows that as on March 7, 2023, the per litre price of Petrol in Delhi was Rs 96.72, in Mumbai it is Rs 106.31 per litre, in Chennai, it is Rs 102.63 per litre in Chennai and Rs 106.03 per litre in Kolkata.

Similarly, as on March 7, 2023, the retail price of diesel was Rs 89.62 per litre in Delhi, in Mumbai it was Rs 94.27 per litre, it is Rs 94.24 per litre in Chennai and Rs 92.76 per litre in Kolkata. Petrol’s per litre price is more than twice in Delhi on March 7 this year in comparison with its price as on April 1, 2010. In the case of diesel, it is costlier by 2.35 times in comparison with its price on April 1, 2010, when it was sold for just Rs 38.10 per litre.

A back-of-hand calculation suggests that oil marketing companies have not passed on the reduction in the crude oil prices of the Indian basket which has seen a sizable decline since June last year when the average price of the Indian basket of crude oil was $116 per barrel. The price of the Indian basket of crude oil declined to $105.49 per barrel in July 2022, then it dropped to $97.4 per barrel in August last year then it further declined to $90.71 per barrel in September, before marginally rising to $91.7 per barrel in October 2022.

However, the price of the Indian basket of crude oil declined below $90 per barrel in November last year when it was calculated to be $87.55 per barrel before hitting a low of below $80 per barrel in December when it was $78.1 per barrel. The average price of the Indian basket of crude oil has been in the range of $80-84 per barrel so far this year. It was $80.92 per barrel in January this year, $82.28 per barrel in February and the average price for March works out to be $83.6 per barrel.