The latest political crisis in Iraq brings bad news for India, which relies on half of its oil imports from volatile Middle East regions. Indian basket of crude oil price has risen to nearly $45 a barrel.
A state of emergency was declared in Baghdad on Saturday after hundreds of supporters of Iraqi Shia cleric Moqtada al-Sadr stormed the Iraqi capital's Green Zone and entered the parliament building. Sadr has been demanding that parliament vote in a new technocratic council of ministers.
Moreover, Islamic State claimed responsibility for multiple suicide attacks in the Baghdad area over the weekend that left dozens of people dead. Low oil prices have severely hit Iraq's economy and Islamic State controls about a quarter of its territory.
India's oil imports from the volatile Middle East region rose to 59 percent in the first 11 months of the last fiscal, reversing a previous decline, parliament was told last week. The increase was mainly on account of the rise in imports from Iraq, which saw the biggest jump from around 24.5 MT in each of the past three years, to 32.97 MT during April-February 2015-16.
Petroleum Minister Dharmendra Pradhan told the Lok Sabha in a written reply that India imported 109.09 million tons of crude from 10 countries in the Middle East between April 2015 and February 2016, which was 59.22 percent of the total oil imports during the period.
The Indian basket, comprising 73 percent sour-grade Dubai and Oman crudes, and the balance in sweet-grade Brent, rose to $44.59 on Friday for a barrel of nearly 160 liters, as per data compiled by the state-run Petroleum Planning and Analysis Cell.
Making their fortnightly evasion in fuel prices, state-run Indian Oil hiked prices on Saturday increasing petrol by Rs.1.06 per liter and of diesel by Rs.2.94, both at Delhi, with corresponding increase in other states.
As per latest Organization of the Petroleum Exporting Countries (OPEC) data, its new reference basket of 12 crude oils rose to $42.70 a barrel on Friday, compared to $42.02 on Thursday, firming up further from its fall to record lows of around $25 a barrel earlier in the year.
Last month, the world's key oil producing countries failed to deliver any concrete agreement to freeze production at the end of their ministerial meeting in Doha.
Major oil producing countries, except Iran, gathered in the Qatari capital Doha discussing a possible crude production freeze in a bid to shore up the floundering global oil markets and the sluggish prices.
The meeting came after prices fell more than 60 percent since June 2014 to as low as $27 per barrel in January due to a widening supply glut.