Wednesday, October 16, 2019
facebook
Business

Posted at: Sep 17, 2019, 4:05 PM; last updated: Sep 17, 2019, 5:59 PM (IST)

Global oil prices drive up petrol, diesel; Sensex tumbles over 600 pts

Global oil prices drive up petrol, diesel; Sensex tumbles over 600 pts
For representation only. Reuters file photo

Mumbai, September 17  

Spiralling global oil prices sharply drove up the cost of petrol and diesel, and sent Indian market indices tumbling down on Monday.

Sensex tanked  642.22 points to end at 36,481.09 and Nifty lost 185.90 points to 10,817.60 points as oil prices rose after drone attacks on two of Saudi Arabia's major oil ports.  

After nosediving 704 points, the 30-share index ended 642.22 points, or 1.73 per cent, lower at 36,481.09. The broader NSE Nifty too settled 185.90 points, or 1.69 per cent, down at 10,817.60.

On the Sensex chart, losses were mainly driven by Hero MotoCorp, Tata Motors, Axis Bank, Tata Steel, Maruti and SBI—falling as much as 6.19 per cent.

Of the 30 scrips of the BSE gauge, HUL, Asian Paints and Infosys were the three gainers.  Investors were spooked by geopolitical uncertainties over the Saudi oil turmoil amid reports that higher oil prices were likely to severely hit economic conditions in India, which imports more than 70 per cent of its oil needs, experts said.

The attack on the world's largest oil processing facility in Saudi Arabia has led to a record surge in global crude prices.

After soaring as much as 20 per cent to USD 71.95 per barrel on Monday, Brent crude futures corrected slightly to trade at USD 67.97 per barrel on Tuesday.

Higher import cost of oil could sharply worsen current account position, compress profit margins and raise inflation, a Nomura report said.

Tracking the movement in oil prices, the rupee further depreciated by 37 paise (intra-day) to trade at 71.97 per US dollar.

Market participants were also on edge awaiting cues from the upcoming trade talks between China and the US as well as a much-anticipated policy meeting of the Federal Reserve, scheduled to begin later in the day.

Elsewhere in Asia, Shanghai Composite Index and Hang Seng ended significantly lower, while Nikkei and Kospi settled in the green.

 

Stock exchanges in Europe were trading on a mixed note in their respective early sessions.

"These attacks resulted in production suspension of 5.7 million barrels of crude oil per day," Saudi Aramco said in a statement.

Oil prices, experts said, could spike in the next several days as a result of the attack on Saudi's state-run oil company, Saudi Aramco—the second-largest oil producer in the world.  

The Drone attacks claimed by Yemen's Houthi rebels set alight two major oil facilities run by the state-owned company Aramco in Saudi Arabia on Saturday, the Kingdom's Interior Ministry said.

The Saudi Press Agency, citing a statement by the Ministry, said that the drones caused the fire at the refinery in the city of Abqaiq, as well as the blaze at the Khurais oil field, around 150 km from Riyadh.

Steep hike in Petrol, diesel

Petrol and diesel prices saw the biggest hike since July 5 Budget as India voiced concern over spike in global oil prices following attacks on Saudi Arabian crude oil facilities.

 Petrol price was increased by 14 paisa per litre to Rs 72.17 and diesel by 15 paisa to Rs 65.58 per litre in the national capital, according to price information available from state-owned oil firms.

This increase is the biggest single-day hike since the July 5 maiden Budget of Finance Minister Nirmala Sitharaman that raised rates by almost Rs 2.50 a litre due to an increase in excise duty on fuel.

The increase in retail prices on Tuesday followed nearly 20 per cent surge in international oil prices in intraday trading —the biggest jump in almost 30 years—in response to attacks halving Saudi Arabia's output, before closing nearly 15 per cent higher at four-month highs.

On Tuesday, international oil prices slid, although the market remains on tenterhooks over the threat of a military response to the attacks. Brent crude was down 36 cents, or 0.50 per cent, at USD 68.66 a barrel.

Oil Minister Dharmendra Pradhan said India, the world's third-largest oil consumer, is keeping a close watch on the developing situation.

"Certainly when there is a spike in prices, it creates anxiety," he told reporters here. "The events since Saturday (when the Saudi oil facilities were attacked) are a matter of concerns to us." He, however, said that oil supplies from Saudi Arabia, India's second-biggest source, have not been disrupted.

"We have uplifted more than half of the contracted quantity for September. We uplifted oil (from Saudi Arabia) yesterday (September 16) and even today (September 17)," he said.

Indian oil companies, as well as the government, are in touch with Saudi oil company Aramco and authorities in the Kingdom, he said. "India is watching the situation closely." India imports 83 per cent of its oil needs. Saudi Arabia is its second-biggest supplier after Iraq. It sold 40.33 million tonnes of crude oil to India in 2018-19 fiscal, when the country had imported 207.3 million tonnes of oil.

Pradhan said reports suggest that the massive drone strike on the world's largest crude-processing facility operated by Saudi Arabia's Aramco has led to a loss of 5 million barrels per day of supplies from Saudi Arabia.

There are expectations that the largest-ever disruption of crude production in Saudi Arabia may keep oil prices elevated in the near term.

Abqaiq and Khurais are main processing centres for Saudi Arabia's Arab Extra Light and Arab Light crude oil.

China, South Korea, Japan and India are the biggest takers of the Saudi oil in Asia, with China and Japan leading the pack at an average of 900-1,100 kilo barrels per day each. India could be most exposed as its reserves are the least. Agencies 

COMMENTS

All readers are invited to post comments responsibly. Any messages with foul language or inciting hatred will be deleted. Comments with all capital letters will also be deleted. Readers are encouraged to flag the comments they feel are inappropriate.
The views expressed in the Comments section are of the individuals writing the post. The Tribune does not endorse or support the views in these posts in any manner.
Share On