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Petrol, Diesel Prices May Soon Rise As Crude Oil Price Touches Seven Year High

Oil Price News: The crude oil prices touched a peak of $90.02 per barrel on Wednesday, the highest level since October 2014. The rising tensions between Russia and Ukraine, a hawkish stance by the Fed and conflicts in the Middle East have led to the rise.

Published: January 28, 2022 9:47 AM IST

By Business Desk | Edited by Raghav Aggarwal

petrol price today, diesel price today
Petrol, Diesel Price Today: Petrol in Mumbai costs Rs 111.35 after the rate cut, Diesel price in Mumbai is Rs 97.28 (File Photo)

New Delhi: In a worrying trend, Oil prices touched a seven-year high of $90 per barrel this week amidst the rising geopolitical tensions and tightening supply. The crude oil prices touched a peak of $90.02 per barrel on Wednesday, the highest level since October 2014, according to a report by Reuters. This may soon have an impact on petrol and diesel prices across the world, including India.

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The Federal Reserve, in its meeting on January 26, said that it will opt for a hawkish monetary policy to bring down the inflation in the USA. The inflation figures have been the highest in seven years in the USA. They are at 7 per cent, up 5 per cent from the target of 2 per cent. The tighter policy stance has already sent ripples across the bond and share markets in the world.

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Why Are Oil Prices Rising?

  • Russia-Ukraine Tensions

For the unversed, Russia is the second-largest producer of oil in the world. Russia and Ukraine have been at loggerheads for quite some time now. The issue around the Donbas region in eastern Ukraine has escalated to a new, disturbing level. According to media reports, Russia is planning to deploy thousands of troops at the Ukrainian border.

Various countries of the west, including the USA, Germany and France, have also deployed their respective troops in the countries surrounding Ukraine. These include the countries of Romania and Bulgaria.

US President Joe Biden had announced, on Tuesday, that they would consider personal sanctions on Vladimir Putin if Russia attacks Ukraine, the Reuters report stated. The rising tensions have continued to push the oil prices up.

  • Middle-East Conundrum

In the middle-east, the fight between Yemen’s Houthi rebels and UAE has also been intensifying. On Monday, the Houthis launched a missile attack on UAE’s base. The missile attack was intercepted by US and UAE armies but the tensions have been rising.

UAE has a major role to play in the oil supply of the world. The uncertainty surrounding the rising tensions around the two countries have also pushed the oil prices to a new high.

  • Supply Cuts By OPEC+

OPEC+, in 2020, had announced drastic supply cuts. This was done as a cushion against the pandemic. The organisation has since then gradually increased the supply of oil but has struggled to do so.

OPEC+ is scheduled to meet on February 2, to announce a supply rise. However, until then the world continues to grapple with shortages.

  • US Federal Reserve Stance

On January 26, the Fed announced that it will announce rate hikes in March to tackle the rising inflation. This has led to a rise in US Dollar. This rise has made oil more costly for other currencies. The dollar index, according to Reuters, has climbed to its highest levels since July 2021. This too has led to an upward push in the oil prices.

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Published Date: January 28, 2022 9:47 AM IST