Indian Oil Corp., the nation’s biggest refiner, and state-run rivals declined in Mumbai trading as crude oil prices increased after OPEC kept output quotas unchanged.
Indian Oil dropped as much as 3.5 percent, the most since May 18, to 311 rupees, and was at 318 rupees at 10:50 a.m. in Mumbai. Bharat Petroleum Corp. fell 1.8 percent to 613.40 rupees and Hindustan Petroleum Corp. declined 2.2 percent to 372 rupees. The benchmark Sensitive Index lost 0.3 percent.
Oil rose for a third day in New York today after the Organization of Petroleum Exporting Countries yesterday failed to reach agreement on production targets for the first time in at least 20 years and U.S. crude inventories fell more than analysts forecast.
Rising crude increases revenue losses and debt for Indian refiners, which sell diesel, cooking gas and kerosene below cost. A meeting of ministers to consider fuel prices hasn’t been scheduled, Press Trust of India reported yesterday.
“OPEC’s decision not to raise output has an adverse effect on the refiners and the overall Indian economy,” said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. in Kochi. “The expected meeting on diesel prices isn’t happening today and that compounds the problems for the refiners, which aren’t in a very good situation anyway.”
Crude for July delivery rose as much as 73 cents to $101.47 a barrel in electronic trading on the New York Mercantile Exchange and was at $101.32 at 1:32 p.m. Sydney time. The contract yesterday climbed $1.65 to $100.74, the highest settlement since May 31. Prices are up 36 percent the past year.
OPEC will maintain its current output for now, according to Mohammad Aliabadi, acting Iranian oil minister and OPEC president.
Indian state refiners lose 4.5 billion rupees on sales of diesel, kerosene and cooking gas, according to a statement on the oil ministry’s website. The prices of these fuels haven’t been increased since gasoline was freed from government control on June 26.
Indian Oil increased gasoline prices last month by 5 rupees a liter in New Delhi, the most since June 2008 and the first since Jan. 16.