NEW DELHI: After four and half months of hiatus, the Oil Marketing Companies (OMCs) on Tuesday have increased the price of Petrol and diesel by 80 paise a litre each. The price was on a pause for the last 137 days, despite the high crude prices in the international markets. Now, Petrol in Delhi will cost Rs 96.21 a litre as against Rs 95.41 previously and diesel will cost Rs 87.47 per litre. Simultaneously, the price of domestic LPG cylinders has also been hiked by Rs 50. With this hike, a 14.2 kg non-subsidised LPG cylinder will now cost customers in New Delhi Rs 949.50.
Experts opined that hike on petrol diesel and LPG was on expected lines and its impact will largely show up in the April inflation number. “Retail fuel prices of petrol and diesel have been kept unchanged since November 2021, whereas global crude oil prices rose by close to $30 per barrel during this period. The pass-through of rising crude oil prices to domestic fuel prices is, therefore, inevitable, and further hikes can also be expected,” said Dipti Deshpande, Principal Economist, CRISIL Ltd.
The oil price in the International market has been on rise for the past three months, and the ongoing war between Russia and Ukraine only exacerbated the situation. The Brent Crude Future, the benchmark of international oil price, had even touched $140 a barrel for the first time since 2014. However, it again came down under $100 per barrel after a week or so. JP Morgan in its report highlighted that with Brent at $105 per barrel, the Oil Marketing Companies are losing Rs 5 to Rs 7 per litre.
Thus, the hike in the retail price of petrol and diesel was imminent. However, the government hasn’t touched the price since 4th November 2021, after the government cut excise duty on petrol by Rs 5 per litre and that on diesel by Rs 10 a litre. At that time, Brent Crude was trading at $81 per barrel.
“The lower excise duty relative to last year will help moderate the impact of rising international crude oil prices, it will not be sufficient to lower fuel inflation if Brent prices stay above $90 per barrel throughout next fiscal. In that case, the government may need to cut excise duties further to alleviate the burden on consumers,” said Deshpande. India imports 85% of its oil requirement, making it one of the most vulnerable to higher oil prices.