Crude oil prices reach a $138 a barrel; India, Nepal, South Africa, Malaysia among others raise fuel prices
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    • Crude oil prices fell below $122 on June 4 after the release of an American government report which stated that supplies of gasoline increased much more than expected in the previous week1. However, the fall was very short-lived as by June 6, oil prices rose by over $10 to reach an unprecedented $138 a barrel. Experts attributed the sudden rise to the sharp fall of the dollar against the euro as well as to the statement by Israel’s transportation minister and deputy prime minister, Shaul Mofaz, advocating an armed
    attack against Iran to stop its nuclear programme2.

    The tremors of the rising crude oil prices were being felt in the domestic politics of many countries as governments were forced to hike fuel prices. India, Nepal, South Africa and Malaysia among others faced domestic unrest over the issue. New Delhi raised petrol prices by Rs. 5, diesel by Rs. 3 and LPG by Rs. 503. The move sparked angry protests by members of the opposition and also by the government’s left allies. Reports noted that these protests could become costly for the UPA in the coming elections.

    Other Asian countries also took similar decisions. In Malaysia for instance, where petrol was heavily subsidized, the government raised petrol prices by 40 per cent. Shahrir Abdul Samad, the domestic trade and consumer affairs minister held out the possibility of further increases in the future. Manila however attempted to cushion the price rise by offering a yearly cash rebate to owners of small cars and motorcycles4.

    Meanwhile, South Korea finalized a package worth over $10 billion to relieve the impact of high oil prices on low-income individuals and self-owned businesses. These measures included oil subsidies to low-income individuals, a possible lowering of taxes on gasoline, diesel and liquefied petroleum, reimbursement of the income tax spent on oil by workers and self-owned businesses, among others5.

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