NEW DELHI: Global crude oil prices rose over 1% in early deals on Thursday as investors worried about a possible supply crunch following Russia's invasion of Ukraine and ensuing sanctions amid demand concerns due to pandemic-induced lockdowns in China.
The International Energy Agency (IEA) has said that Russia’s invasion of Ukraine and Western sanctions on its oil exports could mean 3 million barrels a day of Russian supply effectively cut off from global markets starting next month. The agency slashed its forecast for global oil supply this year by 2 million barrels a day to 99.5 million barrels a day, based on what major producers of the Organization of the Petroleum Exporting Countries (Opec) have currently agreed to pump.
Opec, meanwhile, has said demand in 2022 faced challenges from Russia's invasion of Ukraine and rising inflation as crude prices soar. The cartel, however, has stuck to its estimate that world oil demand would rise by 4.15 million barrels per day (bpd) in 2022.
At 0900am, Brent May contract on the Intercontinental Exchange traded at $99.15 a barrel, up 1.15% from its previous close. The April contract of West Texas Intermediate (WTI) on NYMEX rose 1.33% to 96.30 a barrel.
Prices have eased off late backed by hopes that Russia-Ukraine peace talks would lead to a ceasefire and on demand concerns due to Covid-19 lockdowns in China following its worst outbreak since the start of the pandemic.
On March 7, Brent had touched $139.13 per barrel, the highest since 2008.
High oil prices are a cause of concern for India as the country imports 85% of its oil demand. The recent surge in global crude also pushed up the price of Indian energy basket, comprising of Oman, Dubai and Brent crude. It was last recorded at $110.30 per barrel on 14 March, according to data from the Petroleum Planning & Analysis Cell of the Ministry of Petroleum and Natural Gas.
Although, the increase in crude oil prices has not been transferred to consumers of petrol and diesel so far, oil marketing companies raised jet fuel prices by a steep 18% on Wednesday. In a first, aviation turbine fuel (ATF) prices are now above the ₹1 lakh per kilolitre mark.
On Thursday, retail price of petrol was unchanged at at ₹95.41 a litre, while diesel was sold for ₹86.67 per litre in the national capital.
