Fuel prices head north as global crude jumps 2%

NNEW DELHI: Local rates of petrol and diesel, already at a 13-month high, are poised to rise further as crude oil advanced another 2% to inch closer to $71a barrel on Monday. Oil futures climbed to $70.74 as traders weighed every aggressive comment from both US and Iran that kept pushing up probabilities of a wider conflict in the world’s largest oil producing and exporting region, and bolstering fears of a supply disruption.

What added to the market’s worry was US President Donald Trump’s threat to impose heavy sanctions against Iraq if American troops were forced to leave OPEC’s second-biggest producer.

Trump’s warnings to strike “in a disproportionate manner,” and attack 52 sites if Iran were to retaliate against the killing of its general, and Iran’s threat to “settle scores with the US” kept the market unsettled through the day.

Local prices of petrol and diesel advanced on Monday, in line with international fuel rates, and can soon become a headache for the government already facing the challenge of reviving an economy in the middle of a slowdown.

On Monday, petrol retailed for Rs 75.69 a litre in Delhi and Rs 81.28 a litre in Mumbai. Diesel was at Rs 68.68 in Delhi and Rs 72.02 in Mumbai. Since Friday, petrol and diesel prices are up 34 paise and 43 paise a litre, respectively.

Fuel prices had already been rising in response to the decision by key oil producers, including OPEC members and Russia, to extend output cut until March — in two months, petrol and diesel rates have risen by Rs 3.09 and Rs 2.93 a litre, respectively, in Delhi.

State oil companies use 15-days’ moving average of global fuel rates for local pricing. The current surge in international rates will show up over the fortnight, a state oil company executive said.