With the Trump administration deciding not to renew the six-month waiver that allowed countries like India to buy Iranian oil without facing US sanctions, Brent is on the boil again. The global crude oil benchmark touched a five month peak of $74.64 per barrel on Tuesday amid tightening global supply.
But while Brent crude oil prices have shot up by over 11% in the past one month, fuel prices at home have not exactly been burning a hole in our wallets. On the contrary, as per IOCL data, petrol prices in Delhi, Kolkata, Mumbai and Chennai have gone up by just 40-55 paise since March 10, when the Election Commission announced the schedule for the seven-phase general elections.
Diesel prices have actually come down in the interim period:
Moreover, in the past month, petrol prices at home have actually stagnated by up to three days at a stretch and it's currently down 5 paise since April 20. Given that India adopted a dynamic pricing system in June 2017 to determine fuel prices - to reflect daily fluctuations in global oil market instead of fortnightly price revisions based on the average of the trailing 15 days of benchmark Arab-Gulf fuel prices - this should not be happening at all.
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But then again, India has repeatedly displayed a pattern of pre-poll hiatuses in fuel price hikes in the past few years. Most recently, oil marketing companies (OMCs) had initiated a 19-day price freeze on petrol and diesel ahead of the Karnataka polls in May, despite international fuel prices going up by nearly $5 a barrel in the interim period. But the buck was rapidly passed on to customers immediately after the hiatus ended - over 16-straight days of hikes post May 14, petrol price jumped up by Rs 3.8 per litre and diesel by Rs 3.38.
Similarly, state-owned IOC, Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) had stopped revising fuel prices for almost 14 days ahead of assembly elections in Gujarat in December 2017.
According to reports, IOC had also imposed a freeze on petrol and diesel prices between January 16, 2017, and April 1, 2017, back when the company followed fortnightly revision of fuel prices. That period had seen assembly elections in five states, Punjab, Goa, Uttarakhand, Uttar Pradesh and Manipur.
Given this trend, it's highly likely that Indians will be largely insulated from global oil surges at least till the election juggernaut stops rolling. Pundits say that oil could shoot up to over $80 per barrel in the near future. "Geopolitically infused rallies could shoot prices toward or even past the $80 per barrel mark for intermittent periods this summer," RBC Capital Markets said in a recent note attributing it to factors such as OPEC and allies' supply cuts and robust demand.
But the bad news is that the OMC will, ultimately, pass the buck on to you.
With PTI inputs
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