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Bhubaneswar: Even as the price of petrol today in Odisha is hovering at around Rs 92 per litre, more crude oil anxieties are in store for the common man on the streets in the coming months. The prices will shoot over the Rs 100-mark sooner than later.
A FIERY FORECAST
Since the petro product prices in India are dependent on Brent crude (a global crude benchmark), there is a forecast made today that the Brent crude price will flare-up to $70 per barrel by April 2021.
According to a forecast by Goldman Sachs Commodities, the crude oil prices in the year 2021 will remain firm. It says, the Brent crude price will touch $ 70 per barrel by April - May and may flare-up further to touch $ 75 per by September this year.
Not only, Goldman Sachs, but UBS also had last week predicted that the Brent Price is projected to touch $68 per barrel for the second half of the year.
The reason: Goldman Sachs says, "The freeze in Texas will lead to a 1.5 million barrel per day global deficit this month and the output to witness a 0.2 million bpd in March due to infrastructure damage and missed completions.
Though there is every likelihood that in its meeting next month, the Organization of the Petroleum Exporting Countries (OPEC) may reach an agreement to hike production to cool down the fire in oil, Goldman Sachs, however, thinks this will not cast any bearish impact on crude oil prices.
The reputed investment bank expects a quota increase of only 0.5 million barrel per day (bpd), along with Saudi Arabia's unilateral decision to reverse its earlier decision to cut 1 million bpd.
It says, "Even after raising production, the supply will still lag."
Significantly, the Brent crude oil price today is quoted at $65 per barrel and the Indian Basket of crude oil stood at $62/barrel. And given the current rate of taxation, the prices of petrol and diesel in Odisha are quoted at around Rs 92 litre for petrol and around Rs 91/lit for diesel. (see the chart below)
THE CRUDE GRAPH
With the forecast of hardening of Brent crude prices in coming months, the petro products - petrol and diesel - the retail sale price will cross the Rs 100 by March-end.
The reason is the hardening of Brent crude prices to the level of $70 per barrel will jack up the Indian basket of crude oil (including oceanic freight) to Rs 30.9 per litre from the current rate of Rs 28.2 per litre.
And at the current rate of taxation, the average price of petrol per litre is projected to cross Rs 100 and diesel at Rs 95/litre by the end of April this year.
IS CASH-CRUNCH ODISHA REAPING GOLD?
In the month of January, the price of the Indian basket of crude oil stood at Rs 3801 per billion barrel litre (bbl), and on February 23, the price has risen to Rs 4486 per bbl.
Significantly, at the current rate of VAT (32 per cent for petrol and 28 per cent for diesel), Odisha is gaining Rs 2 per litre more on Petrol today than it was earning in January, and on diesel, the gain per litre today vis-a-vis January stood at Rs 1.
Data shows Odisha consume nearly 16 metric tonnes of diesel per day and around 19 metric tonnes of petrol per day. Given the high volume of sales, the cash-starved Odisha government has been witnessing a windfall from oil price flare-up. As per sources in the State Finance department, the State may see oil revenue amounting to over 6.8k crore flowing to the State coffer in the current financial year (2020-21). In the first half, the State has collected Rs 2,220 crore from petro fuel sales. The collection was a little sluggish as the prices of petrol/diesel remained bearish during the Covid-19 infection period.
