CHENNAI: Already selling at record highs, auto fuels are expected to get even dearer for Indian consumers over the next few months. Notwithstanding the brief dip in crude oil prices due to a high number of delta variant Covid-19 cases in July and August, a faster-than-expected bounce-back in economic activity has resulted in a swift increase in prices too — a trend that is expected to continue over the rest of 2021.
Brent crude is currently trading at just under $80 a barrel on the spot market, a level not seen since October 2018. A September 26 Goldman Sachs research note says that despite the OPEC+’s decision to continue with their plan to increase production, the quick recovery from the delta variant is set to push oil prices to $90 a barrel by the year-end.
Oil prices have surged a steep 23% over this past month, going from $64.75 a barrel on Aug 20 to $79.48 on Sept 27. And Indian fuel prices have begun to reflect the trend. After having kept diesel rates unchanged between Sept 5-23, oil marketing companies (OMC) have rolled out hikes three times in the last 4 days, adding 70 paise a litre to prices. On Monday, diesel traded at Rs 89.32 in New Delhi, Rs 96.94 in Mumbai, Rs 93.93 in Chennai, and Rs 92.42 in Kolkata.
OMCs usually set fuel rates based on a 15-day rolling average of international benchmark prices. The dip in crude prices over July and August had resulted in marginal cuts in petrol and diesel rates in the second half of August. Diesel prices had fallen from Rs 89.87 on August 17 to Rs 88.62 on September 5. Petrol prices fell from an all-time high of Rs 101.84 (New Delhi) on August 21 to Rs 101.19 on September 5.
Industry sources say petrol prices are also likely to start rising if oil prices keep going north —as Goldman Sachs expects. “The current global supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above-consensus forecast and with global supply remaining short of our below consensus forecasts,” the research note said.
