Oil may breach $150 a barrel on mounting Iran crisis

MUMBAI: Oil, which touched $124 a barrel mark on Friday, appears set to touch a new record and breach the $150 mark on mounting Iran crisis. Analysts feel that the government is holding back from hiking fuel prices because of the ongoing elections and a steep hike is likely next month.

The highest that crude price has gone was $147 a barrel recorded in June 2008.

The Indian crude basket, which is pegged at $122 a barrel at present - its highest in the last nine months - is causing a daily loss of Rs 465 crore to oil companies on their sale of diesel, kerosene and cooking gas as retail prices have not been revised of late.

"Oil has surpassed our forecast price and is now trading at $124 a barrel. It will continue moving north on account of mounting Iran crisis. According to IEA forecast, the world has spare capacity of 3.8 million barrels, of which Saudi Arabia's capacity of 1.8 million barrels is never tested so oil prices will continue to go up unless there is a severe demand destruction," Jal Irani, MD, oil & gas at Macquarie Group told TOI.

He added that it will have severe impact on India as oil accounts for over 40% of India's imports and 80% of trade deficit.

Oil import bill is likely to surpass $142 billion this fiscal according to Prime Minister's economic advisory council (PMEAC).