New Delhi: Crude oil prices have soared to a new record above $134 a barrel and may rise even further. The surge in crude oil prices is finally having its impact in India. Though the poll-bound Government refuses to hike prices, oil companies are curbing supplies to cut losses.
Petroleum companies have informed the ministry that supply will have to be curtailed to curb the rising demand.
This would mean that every dealer would receive only a limited quota of fuel every month proportionate to sales.
Petroleum major BPCL has already implemented this move from Tuesday in Mumbai and other companies are expected to follow suit soon.
According to sources the dealers in Mumbai have confirmed that the supply rationing has been introduced from Tuesday.
It seems like the BPCL has adopted the drastic system because of a severe cash crunch for buying oil products.
Other oil majors like as HPCL and IOC are facing a cash crunch with the Government's refusal to allow an increase in retail prices and they may follow the same path.
There is a supply crunch in the market and OPEC's reluctance to raise production despite pressure from the United States.
The Beijing Olympics has led to hoarding of diesel in anticipation of a shortage and the dollar weakness is pushing prices higher.
The climb in prices, which have marked new record highs in 10 of their last 14 sessions, has set off alarm bells around the world, although OPEC has maintained that the market remains well supplied with crude and that prices are beyond its control.
US crude stocks fell 5.4 million barrels to 320.4 million barrels last week, counter to expectations of a small rise in inventories, intensifying concerns about supplies in the world's biggest consumer just ahead of the start of summer.
(With agency inputs)
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