Petrol, Diesel Prices Likely to be Hiked This Week

The prices of petrol and diesel are likely to be hiked this week as oil companies prepare to pare losses accumulated from keeping rates steady for over four months in the run-up to assembly elections in five states, including Uttar Pradesh, despite international oil prices jumping to a 13-year high of $140 per barrel.

According to industry sources, fuel prices need to be increased by Rs. 15 per liter for fuel retailers to break even.

West Texas Intermediate crude futures, the US oil benchmark, rose to $130.50 per barrel on Sunday evening, it’s highest since July 2008, before retreating. The international benchmark, Brent crude, hit a high of $139.13 at one point overnight, also it’s highest since July 2008, reported NDTV.

To compound things, the rupee tumbled to a record low of 77.01 per dollar on Monday, the report said.

India relies on overseas purchases to meet about 85 per cent of its oil requirement, making it one of the most vulnerable in Asia to higher oil prices.

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The twin blows of oil prices, already up more than 60 per cent this year, and a weakening rupee may hurt the nation's finances, upend a nascent economic recovery and fire up inflation.

Ever since Russia put its forces on the Ukraine border, international oil prices shoots up. They spiked after it invaded the central Asian nation on fears that oil and gas supplies from energy giant Russia could be disrupted, either by the conflict in Ukraine or retaliatory western sanctions.

Rating agency ICRA in a report said it expects India's current account deficit to widen to 3.2 per cent of GDP in 2022-23 if the crude oil price averages $130 per barrel, crossing 3 per cent for the first time in a decade.

"We expect the dollar-rupee cross rate to trade in a range of 76.0-79.0 per dollar until the conflict subsides," it said.

The current account deficit (CAD) is likely to widen by $14-15 billion (0.4 per cent of GDP) for every $10 per barrel rise in the average price of the Indian crude basket.

Petrol costs ₹ 95.41 a litre in Delhi and diesel is priced at ₹ 86.67. This price is after accounting for the excise duty cut and a reduction in the VAT rate by the Delhi government.

Before these tax reductions, petrol price had touched an all-time high of ₹ 110.04 a litre and diesel came for ₹ 98.42.

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