Crude oil above $100 again: Will petrol, diesel get costlier soon?

New Delhi (TIP): Global crude oil prices rose above $100 per barrel on Thursday, April 23, crossing a key mark that could bring fresh pressure on India’s long-unchanged petrol and diesel prices.
For now, there is no change at petrol pumps. But if crude remains elevated, experts say the room to shield consumers may narrow quickly.
That raises the question many households, commuters and businesses are now asking. How soon could petrol prices rise in India?
The concern arises as India imports most of its crude oil needs, so when global oil prices rise sharply and stay high, the extra cost eventually has to be absorbed by oil companies, the government, or consumers.
Not necessarily. A one-day spike in crude prices does not automatically mean petrol prices go up the next morning. Oil companies often use existing inventory, refining gains and internal buffers to absorb short-term shocks. But if crude stays near or above $100 for weeks, the pressure can build quickly.
Manoranjan Sharma, Chief Economist at Infomerics Ratings, told me that “if crude approaches $100 per barrel, the sustainability window may shrink to less than a quarter.”
He added that sustained losses beyond Rs 3 to Rs 4 per litre become difficult to absorb without either fuel price hikes or government support.
At the moment, much of that burden appears to be falling on oil marketing companies.
Arun Kailasan, Research Analyst, Geojit Investments Limited, said that at crude levels of around $95 per barrel, Indian oil marketing companies were already “absorbing losses of roughly Rs 1,600 crore per day (Rs 48,000 crore monthly).”
He told me that “existing profit buffers are largely depleted, making the current pricing stance difficult to sustain beyond the near term without either price hikes or fiscal intervention.”
If crude remains above $100, those losses could rise further.
That depends on how long crude stays high. Puneet Singhania, Director – Master Capital Services Limited, explained that the real pressure begins when crude remains above $100.
“The real problem starts if crude moves higher and sustains above $100 per barrel. That’s when margins come under real stress and cash flows start tightening,” he said.He had earlier said companies could likely hold prices steady for a quarter or two if crude stayed in the $85 to $95 range, though profitability would remain tight.