NEW DELHI: Global crude oil prices extended losses on Tuesday from previous day, amid talks between Russia and Ukraine and demand concerns following fresh covid restrictions in China.

At 0940am, the May contract of Brent futures was at $102.54, down 4.08% from its previous close. West Texas Intermediate (WTI) fell below the $100 per barrel mark, with the April contract down 4.04% at at $98.84.

Rahul Kalantri, VP Commodities, Mehta Equities Ltd, said, "Crude oil prices showed heavy sell-off amid Russia-Ukraine de-escalation talks and shutdown in China due to fresh virus outbreaks. The United States also ramped up its shell oil production after prices hit 14-year highs."

The resurgence in covid-19 cases in China has been a major dampener for the oil market. Authorities have had to put around 10 cities and counties under Covid-19 lockdown, including the tech hub Shenzhen.

Oil prices, which soared to near-record levels following Russia's invasion of Ukraine, have cooled down over the past couple of sessions.

On 7 March, Brent hit touched $139.13 a barrel, the highest since 2008. 

High oil prices are cause of concern for India as the country imports 85% of its oil demand. The rise in crude over the past few weeks has pushed up the price of Indian energy basket, comprising Oman, Dubai and Brent crude. It was last recorded at $128.24 per barrel on 9 March, according to data from the Petroleum Planning & Analysis Cell of the Ministry of Petroleum and Natural Gas.

High crude prices also impact current account deficit (CAD) to a great extent, given India's dependence energy imports. An Icra report has said that CAD is likely to widen by $14-15 billion (0.4% of GDP) for every $10 barrel rise in the average price of the Indian crude basket.

"If the price averages $130/bbl in FY2023, then the CAD will widen to 3.2% of GDP, crossing 3% for the first time in a decade," it said.

Although, the increase in crude oil prices has not been transferred to consumers so far, with retail fuel prices unchanged for over four months now, market experts believe that oil marketing companies may raise prices soon.

On Tuesday, retail price of petrol was unchanged Rs95.41 a litre, while diesel sold for Rs86.67 per litre in the national capital.

the government is assessing the evolving geopolitical situation and will decide on cutting excise duty on fuels if the current surge in crude price lingers longer than can be absorbed by state-run fuel retailers.

Morgan Stanley, meanwhile, has raised its inflation estimate and trimmed GDP growth forecast for India for the next fiscal. "Building in higher oil prices, we trim our F23 GDP growth forecast 50bps, to 7.9%, lift our CPI inflation forecast to 6%, and expect the current account deficit to widen to a 10-year high of 3% of GDP," it said in a recent report.

India’s retail inflation hit its fastest pace in eight months in February, led by higher prices of food and manufactured goods. The price gauge remained over the central bank’s 6% upper tolerance band for the second straight month.

Wholesale inflation also quickened in February, staying in double digits for the 11th straight month amid a spike in the prices of energy, metals and chemicals following disruptions in global supplies caused by the Russia-Ukraine conflict.