Are petrol, diesel prices set to fall as Covid forces Europe into 2nd round of lockdowns?

By: |
November 3, 2020 12:57 PM

While petrol prices have remained unchanged since 22 September 2020, diesel rates have been static since 2 October 2020.

Crude, Petrol, Diesel prices, fuel rate, coronavirus, indian economyPetrol price in Delhi is Rs 81.06 per litre and diesel price is Rs 70.46 per litre.

Petrol and diesel prices in India have not changed in more than a month. While petrol prices have remained unchanged since 22 September 2020, diesel prices have been static since 2 October 2020. Petrol price in Delhi is Rs 81.06 per litre and diesel price is at Rs 70.46 per litre. Retail fuel prices are static as international oil prices have been range-bound in the last few weeks, said a report by Care Ratings. Crude oil has traded in the range of USD 39-42 per barrel during October.

Will petrol, diesel prices fall?

With the increase in Covid-19 cases in the US and Europe, oil prices have witnessed a significant fall. Brent crude prices fell 1 per cent on-month and nearly 30 per cent on-year during October 2020.  Further, the upsurge in the coronavirus cases has prompted many European countries to announce a second lockdown. This may also hit the oil demand which has already been substantially muted.

Among the other reasons for low crude prices are the increase in Libyan oil supply and US gasoline inventory. In the start of the month, oil prices had increased on account of closure of facilities on the US Gulf as Hurricane Delta was to hit the shores and due to a labour strike in Norway over pay, which had resulted in the shutdown of operations of 6 offshore oil and gas fields. Despite these factors, oil prices have continued to fall.

However, even if the crude prices in the international market fall, the caveat here is the government’s decision to (or not to) offset the low prices by increasing duties. At present, the government is able to collect around 201 per cent taxes on the base price of petrol and 164 per cent in the case of diesel, the report added. Taxes now make up around 64 per cent of the retail price of petrol and 60 per cent of the retail price of diesel. It is to be noted that though the prices of petrol and diesel are broadly determined by crude oil and forex rates, the retail rates vary from state to state due to local tax.

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