Indian refiners have frozen the price of jet fuel for domestic flights after airlines asked for a respite from fuel price hikes, Bloomberg has reported, adding that in April, jet fuel prices jumped by 8.6% in response to tighter supply.
In an additional concession to airlines, Indian fuel makers also reduced the price of jet fuel for international flights, the report also said, citing unnamed spokespeople from state-owned refiners.
Indian Oil Corp., Bharat Petroleum Corp, and Hindustan Petroleum Corp. have hiked fuel prices four times in the past month in response to the Strait of Hormuz crisis. These are the first fuel price hikes in four years in India, as the government has taken pains to insulate consumers from the fluctuations in global oil markets. India depends on imported crude for over 80% of its consumption.
As we explained two weeks ago, "Where To Find The Next Phase Of The Global Energy Shock", European refiners had ramped up production away from cheaper gasoline and toward much more expensive jet fuel, in response to widespread shortages of kerosene. This was coupled with higher imports from the US, Nigeria and Norway, which also helped to stabilize supply.
But while Europe may have procured much needed jet fuel, in many cases thanks to state subsidies which will transform into more expensive debt as Japan found out this week, India has been less lucky.
The world's third-largest crude importer saw its wholesale inflation jump to 8.3% in April from a year earlier because of the Middle Eastern war and its impact on global oil supply. This was a significant acceleration from 3.88% annual inflation in March, driving wholesale fuel prices higher. These surged in April, with gasoline prices up by 32.4% and diesel prices up by 25.19%. That’s up from a monthly rise of 2.5% for gasoline in March, and 3.62% for diesel.
At the end of May, Kpler analysts revised down their demand projections for India by as much as 39% for this year, expecting growth of just 77,000 barrels daily, down from earlier forecasts of 128,000 barrels daily.
That’s despite a sanction waiver on Russian crude, which accounts for a third of India’s total oil imports and which the United States has extended twice already. Still, India was also importing quite a lot of oil from the Middle East. These flows have been crimped by the Iranian closure of free ship movement in the Strait of Hormuz, despite a deal between Tehran and New Delhi that has allowed several vessels carrying energy commodities to pass through the chokepoint and deliver oil and gas to India.