MK Surana, HPCL chairman and managing director, has recently warned about potential supply chain disruptions as the crisis between Russia-Ukraine worsens. However, he has expressed that efforts are being made to ensure that the consumers get fuel at reasonable pieces.

Surana warned about the issues as the rising crisis between Russia and Ukraine pushed the prices of crude oil close to $100 a barrel recently.

Brent crude, the worldwide benchmark, was up 3.7 percent or $3.48, at $98.87, and had earlier reached $99.38, the highest since September 2014.

In an interview, Surana said that three factors affect crude prices:

• The Russia-Ukraine crisis
• Contrarian opinion coming over Iran-US discussions
• The continuous failure of OPEC in ramping up production as per the need, leading to a per day shortage of 900,000 barrels

Rising crude is a big concern for India, which fulfills 85% of its requirements via imports. However, some Western countries including the US are expected to issue sanctions against Russia amid the recognition of two breakaway regions of Ukraine and ordered troops in, creating supply concerns. After Saudi Arabia, Russia is the second major export of Crude.

The worsening crisis between Russia-Ukraine could result in supply disruptions, said Surana.

Commenting on the recent hike in oil prices, Surana said that OPEC plus countries could not upgrade supplies and were 900,000 barrels short.

The local demand for petrol and diesel is reaching the pre-pandemic level and would rise with the international travel opening in the mid-March soon.

He added that with the likelihood of international travel starting soon and gradual lessening of fears regarding Omicron, the prices are expected to increase.

As per the marketing segment outlook in FY23, the current margins are in the negative, which according to Surana, could help pick up the demand for diesel.

Source Credit - https://www.moneycontrol.com/news/business/commodities/hpcls-surana-warns-of-supply-disruptions-as-crude-closes-in-on-100-a-barrel-8148621.html