• Crude oil prices have surged to over $81 per barrel, the highest since August 2024.
• The increase is attributed to US shipping sanctions affecting Russian oil supply.
• Rising oil prices could impact fuel retail margins in India.
• Experts predict further volatility in oil prices, with Goldman Sachs forecasting Brent crude may reach $85 in the near term.
• India may shift towards Middle-Eastern suppliers due to reduced Russian shipments.

NEW DELHI: Global crude oil prices have experienced a significant uptick, surpassing $81 per barrel—the highest seen since August 2024. This increase is primarily driven by fears of latest US shipping sanctions that could obstruct the flow of Russian oil, prompting a scramble for Middle Eastern and US crude supplies. The sharp rise in oil prices has led to renewed apprehensions among fuel retailers, dashing hopes for a potential cut in fuel prices. Weaker currency values and escalating crude costs are expected to erode retail margins.

Prior expectations suggested a price decrease in petrol and diesel as profit margins reportedly increased to Rs 12 and Rs 10 per litre, respectively. However, shares of major state-run fuel companies such as IndianOil and Hindustan Petroleum fell over 6%, while Bharat Petroleum dropped more than 4% on the National Stock Exchange, signaling possible market volatility ahead. Market analysts from Goldman Sachs predict that the current sanctions might push Brent crude prices to $85 per barrel soon, with potential rise to $90 if Russian output continues to decline along with that from Iran.

This reduction in Russian supply may compel India, the second-largest purchaser of Russian crude, to revert to traditional suppliers in the Middle East, Africa, and the Americas. Tracking reports indicate a gradual increase in Middle Eastern shipments, reflecting this shift. However, this change could be influenced by numerous factors, including the tight price margins on Russian crude amid a drop in oil prices and a reduced export rate from Moscow as they adapt to an increase in domestic demand during winter.

The repercussions of soaring oil prices will likely be felt across the Indian economy, leading to a higher import bill that could worsen the current account deficit and the weakening rupee. As a result, there may be tighter constraints on government spending for social programs and increased costs for various industries.