Three PSU OMCs lost 1.31% to 2.43% at 11:02 IST on BSE as crude oil futures jumped amid Europe's worst geopolitical crisis since the end of the cold war.
HPCL (down 2.43% at Rs 398), BPCL (down 1.83% at Rs 580), and Indian Oil Corporation (down 1.31% at Rs 335.50) edged lower.
Meanwhile, the S&P BSE Sensex was down 49.23 points or 0.19% at 25,511.93.
US crude oil futures for August 2014 delivery rose 50 cents to $103.69 a barrel in electronic trade today, 18 July 2014. The contract had jumped $1.99 a barrel or 1.96% to settle at $103.19 on the New York Mercantile Exchange on Thursday, 17 July 2014, amid escalating geopolitical tensions.
The Boeing Co. 777 crashed en route to Kuala Lumpur from Amsterdam in the main battleground of Ukraine's civil war, threatening to escalate tensions in Europe's worst geopolitical crisis since the end of the cold war. Israel's movement of troops and tanks into the coastal enclave marks the first significant ground operation in Gaza since 2009.
Higher crude oil prices could increase under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices. The government has adopted the policy of gradually increasing diesel prices to eliminate under recovery and deregulate the diesel prices. The government has already freed pricing of petrol.
The Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas reviewed international prices of crude oil and petroleum products during the first fortnight of July 2014. Accordingly, the under-recovery on High Speed Diesel (HSD) applicable for second fortnight of July effective 16 July 2014 will go down to Rs 2.49 per litre. This was Rs 3.40 per litre during first fortnight of July 2014. In the case of PDS Kerosene and Domestic LPG, the under-recoveries for the second fortnight of 2014 continue to be Rs 33.07 per litre and Rs 449.17 per cylinder respectively, as in the last fortnight.
PSU OMCs, effective 16 July 2014, are now incurring combined daily under-recovery of about Rs 261 crore on the sale of Diesel, PDS Kerosene and Domestic LPG. This is lower than Rs 271 crore daily under-recoveries during previous fortnight. The under-recoveries for the financial year 2014-15 are projected to be Rs 91665 crore while the figure was Rs 139869 crore in 2013-14.
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