Several factors to decide the impact of the war on oil and fuel prices: Sitharaman | Latest India News


Bengaluru: Union Finance Minister Nirmala Sitharaman said on Wednesday that there are several factors that will decide the impact of the ongoing war between Russia and Ukraine in reference to rising oil prices crude as well as edible oils.

“There was an open offer in the last two or three days from Russia that gave them (crude oil) at some kind of reduced price, but we don’t know how that can have an effect, because many factors will need to be weighed-in and we will need to get it from a port we are shipping it from and then it has to come to India if it is feasible, if there is insurance cover available… the details, if any, it will work, will have to be worked on,” Sitharaman told Bengaluru on Wednesday.

The Minister’s reference is to Russia’s offer of discounted oil to India. India does not import much oil (less than 2%) from Russia, but given soaring energy prices and the US and UK’s decision to ban imports of Russian oil – meaning demand for oil from West Asian suppliers, where India sources crude from, could skyrocket – the country is eyeing higher oil prices unless he does not find a solution.

Sitharaman added that the relevant ministry is studying the matter.

High oil prices will upset the government’s budget calculations. The finance minister explained that the union government has factored in some rise in crude prices, ‘but now it’s a full-fledged war and it’s also exceeded even the numbers that were given to us, so you’re asking ‘are you going to recalculate’; I can’t recalculate now, so it’s the situation as it evolves, we’ll have to monitor it,” she said.

The price of edible oils is also expected to rise as Ukraine is one of the biggest producers of sunflower oil which is imported and consumed in large quantities in India, the minister added. “Edible oil is also going to be an area where we might have challenges, we need to see how we can address that,” the minister said.

Responding to a question on whether India could benefit from the geopolitical developments one way or another, the minister said export of wheat was being considered.

Sitharaman said the union government is also trying to get more farmers and regions to grow oilseeds and palms which would reduce India’s dependence on imports.

“Another attempt to improve India’s edible oil security is to ensure that the areas of India where palm oil can be grown, as we import huge amounts of oil of palm, both raw and refined. So, where palm oil cultivation is possible, such as the northeast whose climatic conditions, rainfall levels are comparable to Malaysia or Indonesia, we have undertaken palm oil missions and helped farmers get started in palm oil farming,” she said.

She added that the government must support these farmers during the gestation period of 6 to 7 years for the palm to bear fruits that go into making the oils.

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