Indian Oil Corporation (IOC) today raised petrol price by 1 paisa a litre and diesel by 44 paise a litre following the fluctuations in crude prices which have been swinging between the push and pull from coordinated output cuts by major producers on one side, and rising US stockpiles on the other.
The petrol and diesel price hikes, which will be effective from midnight today, comes on the back of Rs 1.39 per litre increase in petrol and Rs 1.04 a litre raise in diesel rates that was announced on April 16. Consumers should know that the actual increase in prices will be more local VAT is taken into account.
Now petrol price in Delhi will go up from Rs 68.07 per litre to Rs 68.09 and that of diesel from Rs 56.83 to Rs 57.35 a litre. Indian Oil Corp (IOC) in a statement said, “The current level of international product prices of petrol and diesel and INR-USD exchange rate warrant increase in selling price of petrol and diesel, the impact of which is being passed on to the consumers with this price revision.”
The three state-run oil marketing firms – Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp review retail fuel prices periodically and usually revise them every fortnight to pass on the impact of global crude oil prices on their purchases.
On the midnight of April 15-16, they had raised the price of petrol by Rs 1.78 per litre and that of diesel by Rs 1.22 per litre (including taxes), which came after a long overdue revision.
Interestingly, beginning Monday, May 1, the state-run oil marketing firms will review petrol and diesel prices everyday on a pilot basis in five cities, namely, Puducherry, Visakhapatnam, Udaipur, Jamshedpur and Chhattisgarh in line with the global crude oil prices. The daily price revision mechanism will later be rolled out across the country.
Crude oil posted a weekly decline despite the oil producers continuing to pump out reduced outputs following a deal between major oil producing nations in November. Global crude oil prices started rising since November-December when the world’s major oil producers, including OPEC (Organisation of Petroleum Exporting Companies) agreed to trim output to help balance the markets and provide a support to falling prices. OPEC, a group of 13 oil producing nations, decided on November 30 to cut global crude oil output by 1.2 million barrels per day. It was first such agreement between these producers since 2008.
However, a rising output of shale oil in the US partly offset the OPEC cuts and continued putting downward pressure on crude oil price. Oil has mostly traded above $50 a barrel since OPEC and 11 other countries started trimming supply in January, but has remained mostly below $55. The rise in prices was recorded after Saudi Arabia said 80% of the agreed cuts have been achieved since the deal became effective on January 1, before falling again later, as the drilling in the US climbing to highest in a year countered OPEC’s efforts to limit the supply.
Brent crude futures settled at $52.05 per barrel on Friday, rising 23 cents. The price of Indian basket of crude oil has risen to $52.87/bbl for the fortnight of April 16, from $50.06/bbl in the previous fortnight, when the last revision was done. Though, the appreciating rupee takes more pressure off Indian buyers. The Indian basket of crude oil comprises sour grade (Oman & Dubai average) and sweet grade (Brent dated) of crude oil processed in Indian refineries in the ratio of 71.03:28.97.
Going ahead, the retail fuel prices may firm up further, supported by new signals that the OPEC and non-OPEC nations may agree to extend production cuts further to contain prices. OPEC is due to meet in May to discuss the oil supply policy, Reuters said in a news report, and added that its secretary-general Mohammad Barkindo has said that the group wants the global inventories to be reduced further. However, any further strengthening of rupee may offset the impact of the global crude oil prices.