Brace for higher LPG, petrol and diesel prices as crude oil prices rise to a 3-year high

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Brace for higher LPG, petrol and diesel prices as crude oil prices rise to a 3-year high
Petrol and diesel prices are set to increase in IndiaUnsplash
  • Petrol and diesel prices are all set to increase further this year.
  • Natural gas prices could also see a major increase, according to analysts at CLSA.
  • Petrol and diesel prices have already surged by 20% this year so far, while Brent crude has surged by over 50% in the same period.
Petrol and diesel prices could increase once again after cooling down for a few weeks, as crude oil prices rose for the fourth consecutive day to touch a 3-year high.

Prices of Brent crude were trading at $77.65 per barrel, the highest since October 2018. For comparison, during the peak of the first wave of COVID-19 last year, Brent crude was trading at $25 levels per barrel. India mostly imports Brent crude, so the record surge in its prices is very likely to have a direct impact on petrol and diesel prices in India.

"Crude prices appear to be on a one-way street that is headed higher, with risk appetite running wild," said Edward Moya, senior market analyst at OANDA, according to a Reuters report.

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Here’s how much crude oil, petrol and diesel prices have increased this year:

ParticularsPrice as on Jan 1, 2021Price as on Sept 23, 2021Change
Crude oil$51.09$77.3851%
Petrol₹83.71₹101.1921%
Diesel₹73.87₹88.6220%

Source: PPAC, Investing.com, Crude oil prices per barrel, Petrol and Diesel prices per litre

According to the analysts at CLSA, there are more price increases in store. The research firm notes that domestic gas prices are set to rise up to 70% in October 2021 to $3.3 per mmBtu, and doubling to $6.7 in April 2022. For context, natural gas prices were at $1.43 per mmBtu in June 2020.
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How do I offset the inevitable increase in petrol, diesel and natural gas prices?



One way of offsetting the inevitable increase in petrol, diesel and natural gas prices ⁠— if you have investible surplus ⁠— is by investing in companies that benefit the most from these price hikes.

According to CLSA, ONGC could be the biggest gainer, with the stock offering up to 40% upside. Others like Indraprastha Gas, Mahanagar Gas and Gujarat Gas offer an upside of 12-15%.
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