The Centre is keeping a close watch on crude prices as any flare-up on account of the Ukraine standoff will impact the prices at retail outlets.
The price of futures contract for Brent crude oil with April delivery on London’s ICE rose 4.18 per cent to $99.38 per barrel on Tuesday morning before paring some gains to settle just above $96. The last time Brent exceeded $99 per barrel was in September 2014.
“It is difficult to say how crude prices will go. Even today, in FSDC, when we were looking at the challenges which are posed for financial stability, crude was one of the things... all these are headwinds,” finance minister Nirmala Sitharaman said in Mumbai.
Analysts said Russia was not a major trade partner and India would not be affected directly by any escalation in the crisis. “We will not be insulated from the repercussions in terms of the prices of crude oil, fertilizers, metals as well as the upheaval that can result in forex markets which translates to the bond markets,” they said.
During 2020-21, bilateral trade with Russia amounted to $8.1 billion compared with $86 billion with China and $80 billion with the US.
Any escalation in the conflict along with stringent sanctions would impact global manufacturing supply chains. A Bank of Baroda research report said Russia’s share of global nickel exports is estimated at 49 per cent, palladium 42 per cent, aluminium 26 per cent and platinum 13 per cent.
Russia makes up for a third of Europe;s natural gas and about 10 per cent of global oil production. About a third of Russian gas supplies to Europe usually travel through pipelines crossing Ukraine.
Russian supplies account for a small percentage of oil imports in India. India imported 43,400 barrels daily, which is 1 per cent of its oil imports. The country buys 2.5 million tonnes of LNG every year from Gazprom.
While supplies seem to be of little worry, it is the prices that are a cause for concern. Domestic fuel prices — which are directly linked to international oil prices — have not been revised for a record 110 days in a row amid elections in five states.
