Petrol prices in India set to rise to Rs 75, diesel Rs 64 as oil surges

By: | Published: December 10, 2016 6:30 AM

Petrol prices are expected to rise 5-8% and that of diesel by 6-8% over the next 3-4 months after the Organisation of Petroleum Exporting Countries (Opec) agreed to cut crude oil production by 1.2 million barrels per day (mpbd), according to CRISIL Research.

Petrol prices are expected to rise 5-8% and that of diesel by 6-8% over the next 3-4 months after the Organisation of Petroleum Exporting Countries (Opec) agreed to cut crude oil production by 1.2 million barrels per day (mpbd), according to CRISIL Research. In Mumbai, that means petrol prices could exceed Rs 75 per litre compared with Rs 72 now, and diesel can reach Rs 64, from Rs 60 at present.

The price of Brent crude could increase to $50-55 per barrel by March 2017, following Opec’s move, and if it surges to $60 as some believe, petrol can hit Rs 80 and diesel Rs 68 per litre. While a cut in production lifts prices, it depends on the Opec members adhering to the cut. There have been many instances of members breaking away from the cartel because of domestic compulsions.

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Thanks to demonetisation, there could be a slowing down in oil usage, but this would rebound once currency in circulation reverts to normal. Higher crude prices also mean that profitability of public sector refiners would improve in the third quarter of the current fiscal driven by inventory gains.

The government will have to keep the oil surge in mind while doing the budget calcuations for next year.

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