Speaking exclusively to ANI, Moda said the increase in crude oil prices from an average of USD 60-65 per barrel to USD 90-95 has significantly raised India’s energy import costs, even as the country continues to prioritise securing supplies amid geopolitical uncertainties.
“Crude oil prices have risen from an average of USD 60-65 to USD 90-95. They keep going up and down, but that increase in average prices essentially means an almost 45-50 per cent rise in our crude import bill,” he said.
Highlighting the impact on inflation through multiplier effect, Moda explained that diesel accounts for approximately 50 per cent of crude oil converted into fuels, making transportation and logistics particularly vulnerable to higher energy prices.
He added that rising diesel prices could increase the cost of goods transported across the country, contributing to broader inflationary pressures across the economic activity.
Moda also highlighted the impact of higher petrol prices on household finances, noting that rising fuel expenditure reduces disposable income and savings.
“As savings decline, people are able to deposit less money in banks. Consequently, banks have less money available to extend credit to businesses, which ultimately impacts economic growth,” he said.On the impact on oil companies, Moda said marketing margins remain under severe pressure as companies are not passing on the entire increase in crude oil prices to consumers.
“Marketing margins continue to be under pressure. We have seen this in the first-quarter results of most oil companies” he said.
He noted that oil companies are increasingly diversifying into petrochemicals and non-fuel retail businesses to protect overall profitability.
According to Moda, petrochemical margins tend to be around 15-25 per cent, compared with single-digit margins in conventional fuels, while non-fuel retail businesses can generate margins of approximately 15-20 per cent or higher.
On reducing India’s dependence on imported crude oil, Moda said new exploration projects, particularly in deepwater and ultra-deepwater locations, typically take 8-10 years to deliver results.
“Exploration in new acreage is being pushed proactively, and will therefore help strengthen India’s energy security beyond 2030. However, that work has to scale up on urgent priority, towards Atmanirbhar Bharat” he said.
For the near term, he identified electrification of two-wheelers and the transition of heavy commercial vehicles towards LNG as important measures to reduce crude oil consumption.
“We expect that perhaps 40, 50 or even 60 per cent of new two-wheelers could transition to electric by 2030,” Moda said.
He added that greater adoption of electric vehicles could reduce petrol consumption, save foreign exchange and lower India’s crude oil import requirements.
Despite elevated crude prices, Moda said India has managed to protect its energy supplies by diversifying imports and strengthening its geopolitical relationships.
“India is now purchasing oil from more countries than it did 20 years ago. This diversification gives us greater negotiating power and flexibility to choose among suppliers,” he said.
Moda emphasised that securing uninterrupted energy supplies remains essential for sustaining India’s economic expansion.
“Ideal situation is where supplies are secure and prices favourable, we have seen that last year. In turbulent times, atleast ensuring energy supply security by itself is keeping India well on track as one of the fastest-growing economies globally” he said. (ANI)