OMCs to absorb crude oil shocks

The Indian public may be spared fuel price hikes despite the war in West Asia stoking crude price volatility, two people aware of the matter said. State-run oil marketing companies (OMCs) are expected to absorb the higher costs, even as they face underrecoveries in selling fuel.

- Rhik Kundu & Rituraj Baruah

The Indian public may be spared fuel price hikes despite the war in West Asia stoking crude price volatility, two people aware of the matter said. State-run oil marketing companies (OMCs) are expected to absorb the higher costs, even as they face under-recoveries in selling fuel.

Concerns of major oil producers in West Asia joining the conflict have also given further impetus to India’s plans to ensure energy security and diversify supply sources, the people cited above said on condition of anonymity.

Brent crude prices on 3 November stood at around $85 a barrel, the same as a month ago. Prices rose to as much as $92.85 on 19 October, up from a low of $75 in May.

“Though the conflict has had a limited impact on oil prices, the price rise hasn’t been passed on to the customers. And this is unlikely to be passed on unless prices hit the ceiling in the coming days," one of the two people cited above said.

“We are closely watching the situation," the person added.