New Delhi [India], June 6 (ANI): Rising petrol and diesel prices are likely to put pressure on household budgets as the ongoing West Asia conflict continues to drive global crude oil prices higher, according to Manoranjan Sharma, Chief Economist at Infomerics Ratings.
Speaking to ANI, Sharma said the sharp rise in international oil prices following the escalation of tensions in West Asia has made higher fuel costs unavoidable despite efforts by the government to shield consumers.
“Petrol, diesel prices have been going up all over the world. All of us are aware that the world is going through a period of great turbulence, particularly in the wake of the West Asian crisis,” Sharma said.
He noted that the closure of the Strait of Hormuz has significantly impacted global oil supplies and posed a challenge for India, which depends heavily on crude imports passing through the route.
“About 60 per cent of the oil which we import in India comes from the Strait of Hormuz,” he said.
Highlighting the surge in crude prices, Sharma said oil was trading at around USD 67-68 per barrel when the conflict began but has since risen sharply.
“When the war began, the oil was trading at something like USD 67 a barrel or USD 68 a barrel. Now currently the oil is at USD 100 a barrel in terms of Brent crude, in terms of spot prices, the prices are something like USD 120 or even USD 130 a barrel,” he said.
According to Sharma, while the government has attempted to cushion the impact on consumers, there are limits to how much protection can be provided in the face of a global energy shock.
“The government has tried to insulate the common person, the aam aadmi, but then there is a limit to what the government can do,” he said.
He added that fuel prices have been rising in a “gradual and calibrated manner” over the past few weeks and warned that the impact on households would be difficult to avoid.
“Obviously, this would dent household budgets, this would cause some kind of hardships to households, but this is something inevitable because this is a global issue which is not within the control of policy makers, planners, and even those at the helm of affairs in India,” Sharma told ANI.
On possible long-term solutions to reduce India’s vulnerability to oil price shocks, Sharma pointed to the country’s growing focus on renewable energy and alternative energy sources.
“If you look at India’s position, we have been moving at a steady pace towards renewable energy. India’s renewable energy production constitutes something like one-third of the total energy production in India, which is one of the healthiest energy production proportions all over the world,” he said.
However, he cautioned that reducing dependence on imported fossil fuels would take time.
“This is something like a work in process. This is something which cannot be done overnight, and it will take some time to bear fruit,” he added. (ANI)
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