The already-elevated India's crude oil basket price is rising, with the average based on daily costs for June jumping to over $115 per barrel, compared to $109.51 in May and $102.97 in April.
The Indian government, on May 21, had reduced excise duty on petrol by Rs 8 per litre and by Rs 6 per litre on diesel in a move to combat rising inflation and avoid the pass-through of higher fuel rates as it would have pressured rising prices even further.
While that cut in prices more or less offset the hike in petrol and diesel costs when state retailers restarted revisions late in March, unless the government decides to lower the burden on the common folk again, fuel rates are not likely to come down anytime soon.
According to the Petroleum Planning and Analysis Cell report on Friday, the price of Indian crude was $115.17 per barrel on June 2, 2022, at an exchange rate of (Rs/$) 77.59, underscoring a high average for June so far and likely to remain that way based on trading patterns in International oil markets.
The European Union's partial embargo on Russian crude will likely keep oil prices aloft in the near term, at least until the Ukraine war ceases and as demand increases from the world's largest consumer after China has started to ease COVID-led restrictions.
Indeed, oil prices settled higher on Friday, supported by expectations that OPEC's decision to increase production targets slightly more than planned will not add that much to global supply, which should tighten as China eases COVID restrictions.
On Thursday, the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, agreed to boost output by 648,000 barrels per day (bpd) a month in July and August rather than 432,000 bpd as previously agreed.
Brent crude rose $2.11, or 1.8 per cent, to settle at $119.72 a barrel. US West Texas Intermediate (WTI) crude advanced $2, or 1.7 per cent, to $118.87. Both benchmarks were up by $3 in after-hours trading.
US crude notched a sixth weekly gain on tight US supply, which has prompted talk of fuel export curbs or a windfall tax on oil and gas producers.