The outbreak of inflation due to Iran-Israel war! Will petrol-diesel prices increase by Rs 10-12?
- Crude oil prices may rise
- Petrol and diesel prices will be tough
- Effects on other factors
Oil Prices: Iran’s Supreme Leader Ayatollah Ali Khamenei has been killed in an attack by America and Israel. If the war continues and the oil route through the Strait of Hormuz is blocked, crude oil prices may rise. This can affect oil prices, stock market and gold-silver in India.
Will gold prices cross 2 lakh mark due to Iran Israel conflict? What the experts say…
Petrol and diesel prices will be tough
Petrol prices in Delhi may increase from Rs 95 to Rs 105 per litre. Diesel prices may increase from Rs 88 to Rs 96. Because India imports 90 percent of its oil requirement. About 50 percent of this crude oil comes from the Strait of Hormuz. Experts believe that if Iran blocks this route, the supply of crude oil in the international market will decrease and prices may reach 100 to 120 dollars per barrel. Brent crude price is currently around $70 per barrel. Companies have the freedom to change prices, but the final decision rests with the government.
Petrol and diesel prices in India are set by state-owned oil companies. They depend on the average international crude oil price of the last 15 days and the position of the rupee against the dollar. However, companies set a base price. The final price reaches the common man, however, mainly due to central and state government taxes which increase their prices.
That is, oil companies are free to raise prices, but the final decision depends on the government’s stance. In a war-like situation, the government may advise firms not to raise prices to maintain political and economic stability, or it may itself lower taxes to avoid passing the burden of increased prices on to the public.
The price of gold and silver will also increase
According to commodity expert Ajay Kedia, gold prices may increase to Rs 1.90 lakh from Rs 1.60 lakh per 10 grams. The price of silver, which is currently at Rs 2.67 lakh, may go up to Rs 3.50 lakh. Investors consider gold a safe haven during times of war.
Stock market conditions
Market experts predict that the stock market will fall by 1-1.5 percent. This means Sensex may fall by 1300 points and Nifty by 300 points on Monday. During times of stress like war, investors withdraw money from the market and invest in safe places.
3 km wide for sea traffic
The Strait of Hormuz is a 167 km long waterway that connects the Persian Gulf to the Arabian Sea. Its mouth is about 50 kilometers wide, while the narrowest part is about 33 kilometers. A 3 km wide shipping lane has been designated for inbound and outbound marine traffic.
20 percent of the world’s petroleum passes through it. Iran, along with other countries such as Saudi Arabia, Iraq and Kuwait, also depend on it for their exports. More than 10 percent of India’s total non-oil exports are exported through this route. These include basmati rice, tea, spices and engineering goods. Approximately 17.8 million to 20.8 million barrels of crude oil and fuel travel through this route per day. Iran itself exports 1.7 million barrels of petroleum per day through this route.
India imports oil from other countries
The government is already preparing to face this potential crisis. According to sources, India is increasing its oil purchases from non-Gulf suppliers. Moreover, India can also draw oil from its Strategic Petroleum Reserve (SPR) if needed.
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