| Subir Raha, chairman and managing director of ONGC, said one third of the present crude oil prices was on account of fear premium. |
| "I do not foresee any development in the near term which may ease the speculative pressure on crude oil prices arising out of geopolitical risk," Raha told the media in Kolkata on Friday. |
| Benchmark Brent crude prices soared to $52.65 a barrel on supply concerns. International reports today suggested it could touch $55 a barrel. |
| Volume of trade in crude oil futures had shot up in recent times. |
| "Everyone is buying futures hoping that price will go up. In turn, it is putting pressure on futures and also pushing up prices," Raha pointed out. |
| Winter season from the West was expected to push up demand for heating oil in Europe and United States. Actual consumption depend upon the severity of winter but buying was usually done well in advance based on predictions of the severity of the winter, sector analysts said. |
| The last two seasons had been bad, with flooding in some parts of Europe. As a consequence, demand was higher this year, analysts added. The government had insulated domestic retail prices from the vagaries of international market to some extent till now. |
| Upstream companies like ONGC and GAIL were being made to share some of the cost of under recovery with oil marketing companies like Indian Oil, IBP, Bharat Petroleum and Hindustan Petroleum. Raha said ONGC had to pick up the bill for subsidy to the extent of Rs 1900 crore in the first two quarters of 2004-05. |
| In the absence of erstwhile oil pool account where the deficit was managed by issuing bonds, upstream companies were being asked to absorb the loss on their balance-sheet. |
| "ONGC has an aggressive expansion plan which requires Rs 4,000-5,000 crore a year. It is a debt free company now, but a time will come when it will have to make a trade-off between raising debt and taking risk on the balance-sheet," Raha explained. |
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