Petrol prices hit a new high, retailing at ₹85.45 per litre in NCR
After holding prices steady for two-days, oil marketing companies (OMCs) again increased petrol and diesel prices by 25 paise per litre each on Friday
NEW DELHI: Petrol prices hit a new high in India on Friday, as oil marketing companies (OMCs) again increased petrol and diesel prices by 25 paise per litre each, after holding them steady for two days.
Petrol was selling at Rs85.45 per litre in the national capital region, the highest price till date, while diesel was retailing at Rs75.63 per litre. Diesel is retailing at a record high price in Mumbai.
OMCs in India started increasing the prices of transportaion fuel in January after holding the retail price steady for 29 days.
The cost of the Indian basket of crude, which comprises Oman, Dubai, and Brent crude, was $56.19 a barrel on 20 January. With Saudi Arabia, the world’s largest oil producer reducing output and the ongoing vaccination drive worldwide, global crude oil prices have risen. Brent is trading at $55.60 per barrel, while West Texas Intermediate is selling at $52.58 a barrel, at the time of writing this article.
There are increasing calls for the government to lower taxes on transportation fuels, as central and state taxes and the commission of dealers are added to the refinery gate price of auto fuel to arrive at the retail price.
India, the world’s third-largest oil importer, has on its part also been making a case for a global consensus on “responsible pricing" and affordable oil prices to allow for a consumption-led demand recovery. Every dollar per barrel rise in crude prices increases India’s oil import bill by Rs10,700 crore on an annualized basis. India spent $101.4 billion on crude oil imports in 2019-20 and $111.9 billion in 2018-19.
Oil prices have been on an upswing after the13th Organization of the Petroleum Exporting Countries (Opec)-plus meeting on 5 January decided on “adjustments to the production level for February and March 2021". The Opec-plus decision is significant for India, as Opec makes up for about 40% of global output and 83% of India’s oil imports.
“The meeting recognized that market sentiment has been buoyed recently by vaccine programmes and improved asset markets, but underscored the need for caution because of prevailing weak demand and poor refining margins, the high stock overhang and other underlying uncertainties," Opec said.
India is particularly vulnerable to a high energy price regime, especially as its economy is projected to contract by a record 7.7% in the year ending 31 March, the sharpest annual contraction on record. Also, the factory output of Asia’s third-largest economy shrank in November after registering two straight months of growth. However, retail inflation has dipped to a 14-month low in December.
With the spread of the pandemic, the price fell to $19.90 in April before rising to $49.84 a barrel in December, data from the Petroleum Planning and Analysis Cell showed. It averaged $56.43, $69.88 and $60.47 per barrel in FY18, FY19 and FY20, respectively.
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