Saudi Aramco drone strikes: Petrol, diesel prices likely to rise in India after crude sees biggest-ever jump of 19% since 1991

Petrol, diesel prices may rise in the country following the attacks on Saudi Arabia's oil facilities on Saturday that shut 5 percent of the global crude output causing the biggest-ever surge in oil prices since 1991, said media reports.

The crude oil prices had shot up to record peak after US officials blamed Iran and President Donald Trump said Washington was “locked and loaded” to retaliate.

The attacks sent oil prices sky-rocketing on Monday, with Brent futures up $12 — or nearly 20 percent — in the first few minutes of business, while West Texas Intermediate (WTI) jumped more than $8, or 15 percent, AFP reported.

Representatiional image. Reuters

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Petrol and diesel prices may increase domestically in the next few days, in line with the current surge in the crude oil prices, said a report in Business Today.

However, any price rise of petrol and diesel in the coming days will not last long due to the diversified crude procurement strategy of the Indian oil companies, the report said quoting experts.

On Monday, a litre of petrol was selling at Rs 71.89 in Delhi, Rs 77.57 in Mumbai, Rs 74.70 in Chennai and Rs 74.62 in Kolkata per litre.

While diesel was available at Rs 65.28 per litre in Delhi, Rs 68.46 in Mumbai, Rs 68.99 in Chennai and Rs 67.69 in Kolkata a litre.

Earlier in the day, Saudi Aramco assured Indian refiners that there will be no shortage in supplies, the oil ministry said on Monday, after the attack on Saudi Arabia’s crude oil facilities over the weekend. The assurance came as a major relief.

"Yesterday (15 September ), Saudi Aramco officials informed the Indian refiners that there would be no shortage of supplies to them. Ministry of Petroleum and Natural Gas is closely monitoring the situation in consultation with Indian refiners and Saudi Aramco," it said in a statement.

Officials at state-owned oil refiners said Saudi Aramco has informed that there would not be any major disruption, but has sought flexibility for switching to different grades for continuing supplies.

Wood Mackenzie VP for Refining, Chemicals an Oil Markets, Alan Gelder said, "This attack has material implications for the oil market, as a loss of 5 million barrels per day of supplies from Saudi Arabia cannot be met for long by existing inventories and the limited spare capacity of the other OPEC+ group members. A geopolitical risk premium will return to the oil price."

Commenting on the situation, Kotak Institutional Equities said the largest-ever disruption of crude production in Saudi Arabia may keep oil prices elevated in the near term.

"Any further escalation of geopolitical tensions in the Middle East region, which cannot be ruled out for now, may add to the woes of global oil supplies for now given lack of buffer from Saudi's significant spare production capacity," Kotak said.

Saudi Arabia is India’s, the third-largest oil importer, top oil supplier after Iraq. In January-July, it supplied 788,200 barrels per day of oil to India.

Soon after the attack, Trump announced on Sunday that he had authorised the release of oil from US strategic reserves after drone attacks cut Saudi Arabia's crude production by half.

— With inputs from agencies