After hitting a three-year high on Monday, the petrol and diesel prices are on rising streak as the crude oil price continue to rally on the back of global geopolitical risks, higher demands and production cuts. The petrol price in Delhi today is Rs 71.27 per litre and diesel price in Delhi is Rs 61.88 per litre. In other metro cities, too, the prices have risen.
The petrol price in Mumbai today is Rs 79.15 per litre and diesel price is Rs 65.74 per litre. The petrol and diesel prices in Chennai today are Rs 73.89 per litre and Rs 65.23 per litre, while in Kolkata the prices for petrol and diesel are Rs 74 per lire and Rs 64.54 per litre.
The impact of excise duty cut of Rs 2 per litre on retail fuel, announced in October, has been completely or partially reversed due to the steep rise in the crude oil prices. Just before the excise duty cut, the petrol price in Mumbai was Rs 79.99 per litre. Since the Brent Crude oil price is continuously rising, and is even expected to touch $80 per barrel, the fuel price in India is going to rise further, unless there is government intervention.
While Brent crude oil price at $70 per barrel is highest since December 2014, the petrol price in Delhi at Rs 71.27 per litre is highest since May 2014, as the central government on the back of low crude oil price three-year windfall, hiked excise duty on both petrol and diesel by Rs 12 per litre and Rs 13.77 between April 2014 and October 2017. A Rs 2 per litre cut was announced on October 3, 2017.
According to reports, oil ministry recently indicated that the government may review the excise duty being levied on retail fuel when, and if, crude oil price touched $75 per barrel. Since October, Since October 4, the Brent crude oil price has gone up from $55 per barrel to $70 per barrel.
As the Brent crude oil price is expected to rise further, one can expect petrol and diesel prices to go up as well — not quite pinching after daily revision kicked in, which allowed hike in prices in few paise every day, instead of big hike fortnightly.
Why oil is on the boil
The rising crude oil price is likely to upset the fiscal math of Finance Minister Arun Jaitley. The oil rice escalated nearly $15 in just three months.
Moreover, it is further going to push up the inflation, which has already breached Reserve Bank of India’s 4% target. With rising oil prices, the repo rate cut by the central bank also looks unlikely, further impacting country’s investments and production cycle.