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 The Russia-Ukraine crisis-led global hike in crude oil prices is expected to push India's domestic prices of petrol and diesel by Rs 20-22 per litre.

However, an excise duty cut may dampen the impact on petrol and diesel prices to an extent, but not entirely.

The crisis as well as fears of lower supplies have pushed Brent crude oil price to nearly an 8-year high on Wednesday.

Besides, robust global demand is expected to keep the Brent index crude oil price high.

Consequently, crude oil prices have surged by nearly 15 per cent in the last two days on fear of tight supplies.

On Wednesday, the Brent-indexed crude oil prices rose to over $111 per barrel on Wednesday.

It had risen to $102 per barrel on Tuesday from Monday's $98 per barrel mark.

At present, Russia is the third largest producer of crude oil in the world.

It is feared that sanctions against Russia will curtail global supplies and stifle growth.

On the other hand, India is a major crude oil importer in the world, and for it, the price range is a cause of concern as it may add Rs 20 to Rs 22 in petrol and diesel selling prices, if the OMCs decide to revise the current prices.

"The recent spike in oil prices may now held for Rs 20 per litre hike in domestic petrol prices if OMCs decide to raise fuel prices," said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.

Lately, petrol and diesel prices have been largely stable over the past 3 months.

In January 2022, oil prices averaged at $85.5 per barrel. During that month, petrol and diesel prices in Delhi were at Rs 95.4 per litre and Rs 86.7 per litre, respectively.

Despite the increase in oil prices in February, petrol and diesel prices have been stable to keep inflation under check.

"If the oil prices continue to be close to $100 per barrel, petrol prices could also likely witness price hikes of around Rs 9-12 per litre," said Hetal Gandhi, Director, Crisil Research.

Bhanu Patni, Senior Analyst, India Ratings and Research, said: "The increase in crude prices is expected to lead to a higher increase in the retail prices as the prices on the retail side have not seen a commensurate increase."

"OMCs, to manage their profitability, may have to resort to the increase."

Furthermore, the cascading effect of higher fuel cost will trigger a general inflationary trend.

Already, India's main inflation gauge -- Consumer Price Index (CPI) -- which denotes retail inflation, has crossed the target range of the Reserve Bank of India in January.

In terms of industry calculations, a 10 per cent rise in crude oil prices adds nearly about 10 basis points in CPI inflation.

"Clearly, high crude oil prices that have breached the $110 pb mark due to the emerging geo political crisis in Ukraine, will create significant inflationary headwinds for the Indian economy," said Suman Chowdhury, Chief Analytical Officer, Acuite Ratings & Research.

"It can be noted that there has been no revision in retail fuel prices since Nov' 21 when crude oil was pegged at around $80 pb. While the losses are being absorbed by the oil PSUs as of now, there is a high likelihood of an increase in retail prices in the near term. However, it is also likely that a part of the increase will be offset by a further cut in excise duties that has already happened once in Nov-21."

Aditi Nayar, Chief Economist, ICRA, said: "If the GoI roll back excise duty on petrol and diesel to the pre-pandemic level, a portion of the required rise in pump prices can be offset, albeit at a fiscal cost of Rs 92,000 crore."

Last week, the Centre said it is open to support initiatives for releases from Strategic Petroleum Reserves to mitigate market volatility and calming the rise in crude oil prices.

India has built strategic petroleum reserves with a capacity to hold 5.33 million metric tonnes (MMT) or 38 million barrels of crude at three locations -- Visakhapatnam, Mangaluru and Padur (TN).

In 2021, India had decided to join the global alliance of major oil consuming countries by agreeing to release oil from its strategic oil reserve to address the supply constraint that has kept crude prices high.

It had agreed to release 5 million barrels of crude oil from its strategic petroleum reserves.