The government may hike LPG prices by Rs. 5 and kerosene by Re. 1 due to spurt in crude oil price in international market.
Crude oil prices have shot up to a nine-month high of over USD 115 per barrel. Since India imports 79 per cent its oil and subsidies fuel, higher oil prices are particularly painful for Asia’s third-largest economy.
The under recovery on diesel for the current fortnight was at Rs. 1.62 a litre, while that of kerosene and domestic LPG stood at Rs. 32.87 a litre and Rs. 432.71 a cylinder, respectively.
Spurt in oil prices could exacerbate the country’s fiscal and current account deficits as well as its already-high inflation rates.
The fourth-largest oil consumer in the world imported 190 million tonnes of oil in 2013-14. About 13 per cent of this came from Iraq, second only to Saudi Arabia which supplies about 20 per cent of India’s oil imports.
So far oil production in Iraq has not been disrupted as the violence is restricted to mostly northern and western parts of the country.
Southern Iraq accounted for more than 85 per cent of the country’s 3.1 million barrels a day of production in April and all of its 2.5 million bpd of exports are shipped by ship tanker from the Persian Gulf.