The ministry of finance has raised the windfall tax on the sale of domestically produced crude oil to ₹4,900 per ton, effective March 16. The adjustment represents an increase from the previous two weeks’ special additional excise duty (SAED) of ₹4,600 per ton. Notably, the export tax on petrol, diesel, and aviation turbine fuel remains unchanged at zero. The decision to raise the levy comes amidst fluctuations in global crude prices due to geopolitical tensions. Recent attacks by Ukraine on Russian oil refineries resulted in a 2% surge in crude prices.
Although oil prices experienced a slight decrease, they were poised for a weekly gain of over 3%, supported by the International Energy Agency’s upward revision of its 2024 oil demand forecast and an unexpected reduction in US stockpiles. Brent crude traded at $85 a barrel, down 0.49% from the previous close.
As of March 14, the Indian crude basket, consisting of both sour grade (Oman & Dubai average) and sweet grade (Brent Dated) crude oil processed in Indian refineries, was priced at $84.50 per barrel. The basket’s March average stands at $83.19 per barrel, up from February’s average of $81.62 per barrel.
The government initially introduced windfall taxes on domestically produced crude oil sales in July 2022. This measure was implemented as exploration and production companies reaped significant benefits from the spike in crude oil prices following Russia’s invasion of Ukraine.
The government imposed an additional levy on the export of petrol, diesel, and jet fuel to counteract private refiners’ inclination towards international markets due to more favourable pricing abroad. These levies are reassessed every two weeks based on average oil prices in the preceding fortnight.
As reported by mint, the Organization of the Petroleum Exporting Countries (OPEC) anticipates strong demand in 2024 and 2025. According to its latest monthly report, OPEC projects a rise in world oil demand by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025.
