NEW DELHI, Feb 16 (Agencies): With tension over Iran’s aggressive nuclear programme escalating and Tehran having been besieged by global sanctions, an increase in global fuel prices cannot be ruled out.
Iran is the second-largest oil producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia.
India, which became the world’s largest importer of crude oil from Iran last month, is likely to be hit quite hard too: which means that the prices of petrol, diesel, cooking gas and other petroleum products will rise. International crude oil prices zoomed to $120 a barrel on Wednesday.
This will put additional pressure on the common man and also adversely affect the government’s efforts to control rising inflation and curb rising fiscal deficit as the oil import bill goes through the roof.
But the price hike may not come into force in India anytime too soon due to the ongoing Assembly elections and the government would not want to upset the apple cart. So, for the moment, India has adopted a defiant stance in the face of the pressure on it to eschew trade ties with Iran.
Global oil prices spurted as Iran banned oil exports to six European Union nations in retaliation to the sanctions imposed against Teheran by Europe.
While about 12 per cent of India’s oil imports are from Iran, any disruption in this flow would lead to short-term pain for the economy, and — till such time as New Delhi makes alternative arrangements for oil supplies — India will have option but to allow oil refiners to increase fuel prices.
But the government is likely to take a hit on its rising subsidy bill rather suffer a political setback even as polling is still on some states. For long, the price of petrol and diesel has been used by successive governments as a weapon to attain its political ends and, thus, the chances of an increase in prices of cooking gas and fuel – while inevitable post-elections – is less likely in the immediate future.