NEW DELHI: Global benchmark Brent crude topped the $100-per-barrel mark Thursday for the first time in nine weeks as the renewed conflict between US and Iran in West Asia disrupted shipments thr-ough Strait of Hormuz, while Tehran-backed Houthi rebels continued to target shipping through Bab el-Mandeb Strait.Brent jumped nearly 7% in a day and was trading at $100.71 per barrel (at 8.30 pm) for Sept contracts. The Indian basket of crude also climbed to $93.19 per barrel Wednesday, up nearly 40% from the July 2 levels of $67 per barrel, when US and Iran appeared to be poised to work out a peace deal.A senior executive of an oil marketing company said the current rise in crude prices related to Sept contracts and could hurt the finances of oil retailers in the second and third quarters if the trend persisted for a few more weeks. After incurring under-recoveries on petrol, diesel and domestic LPG during the conflict, oil retailers had broken even in the last week of June as crude prices softened to near pre-conflict levels. In any case, they were losing on cooking gas cylinders and that burden would rise further.
Rising oi lprices
In the June quarter, state-owned HPCL and BPCL reported combined losses of over Rs 14,000 crore while recording LPG under-recoveries of over Rs 7,000 crore.During an analysts call Thursday, BPCL’s director (finance), VRK Gupta, said markets witnessed a brief period of stability in June, but the latest geopolitical developments had reminded everyone how quickly they could reshape the operating landscape. What adds to concerns is the absence of any discount on Russian crude, although it does provide stability in terms of supply.This time there is additional worry due to disruption to shipping through Bab el-Mandeb Strait, which officials said could emerge as the next major energy security challenge, threatening crude supplies from both Saudi Arabia and Russia while driving up freight costs and global oil prices.Saudi Arabia has increasingly relied on its East-West Pipeline to move crude to its Red Sea port of Yanbu, bypassing Hormuz. A large number of vessels carrying cargo to India and other Asian countries from Europe transit Suez Canal before passing through Red Sea and the Bab el-Mandeb Strait to reach their destinations.Prashant Vasisht, senior vice-president and co-group head at corporate ratings ag-ency ICRA, said Saudi Arabia had recently become India’s third-largest crude oil supplier after Russia and the UAE. It is supplying 5.5-5.9 million barrels a day to global markets through its Red Sea ports, primarily Yanbu. “If this supply is threatened, it would have an inflationary impact on global crude oil prices,” Vasisht said.
