The geo-political crisis-led global hike in crude oil prices is expected to push India’s domestic prices of petrol and diesel by Rs 15-22 per litre, say experts. Petrol, diesel prices, which are deregulated and directly linked to international oil prices, not getting revised for a record 124 days in a row now. The status quo coincided with assembly polls in Punjab, Goa, Uttrakhand, Manipur, and Uttar Pradesh. Thus, it is widely expected that the OMCs will revise the current prices on or after March 11, which is the day after state assembly election results.
Analysts opined that crude and election have any impact on oil price, however, Roop Bhootra – CEO, Investment Services, Anand Rathi Shares and Stock Brokers, said: “The crude oil prices hitting new highs in global markets, one could expect some price hikes in domestic markets. However, the government has many options to it and could also cushion the impact by adjusting taxes in order to reign inflationary pressures.”
However, an excise duty cut may dampen the impact on petrol and diesel prices to an extent, but not entirely. At present, India imports 85 per cent of its crude oil needs.
Government on Price Hike
Commenting on a decision on the rise in petrol, diesel prices, Rameswar Teli, MoS, Petroleum, and Natural Gas, said: Petroleum Ministry with oil companies decide the rate of oil, it’s yet to happen. People are aware that oil prices are increasing amid the ongoing war. As & when the meeting takes place you (people) will be informed about the prices.”
Government’s Efforts
The central government had cut excise duty on November 4, 2021, to give relief from prices that had reached an all-time high level. The government had slashed the duty on petrol by Rs 5 per litre and diesel by Rs 10 a litre, leading to a substantial reduction in fuel prices.
Following central government’s path, several other states have also reduced Value Added Tax or VAT on petrol and diesel prices. In December 2021, the Delhi government had reduced the value-added tax on petrol from 30 per cent to 19.40 per cent. With this, petrol prices in the national capital were slashed by Rs 8.56 per litre.
The Crude Oil Impact
Global oil prices fell on Wednesday by the most in nearly two years after OPEC member the United Arab Emirates said it supported pumping more oil into a market roiled by supply disruptions due to sanctions on Russia after it invaded Ukraine.
Brent crude futures settled down $16.84, or 13.2 per cent, at $111.14 a barrel, their biggest one-day decline since April 21, 2020. U.S. crude futures ended down $15.44, or 12.5 per cent, at $108.70, their biggest daily decline since November.
The Rupee on Thursday surged 42 paise to Rs 76.20 against US dollar in the opening trade. It was supported by positive domestic stock market and early trends in the assembly elections results due on March 10.
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