Fuel price hike: Petrol, diesel prices hike again amid volatility in oil market
Petrol and diesel prices rose for the second consecutive day on Friday amid volatility in global crude oil prices with benchmark crude trading as high as $78 a barrel. According to Indian Oil Corporation, the country’s largest fuel retailer, accordingly, diesel prices in the national capital increased by 30 paise to Rs 90.17 per liter, while petrol prices rose by 25 paise to Rs 101.89 per litre.
Diesel prices have now gone up for six days, taking its retail price to 1.55 paise per liter in Delhi. Diesel prices were hiked by 20 paise per liter on September 24 and then by 25 paise per liter on Sunday, Monday and Tuesday and by 30 paise per liter on Thursday and Friday.
Petrol prices had remained stable since September 5, but oil companies hiked their pump prices this week due to the recent rise in product prices.
Oil marketing companies had prioritized keeping their watch prices on the global oil situation before making any price revisions. This is the reason why petrol prices were not revised for the last three weeks. But the extreme volatility in the global oil price movement has now prompted OMCs to impact the growth.
OMC’s wait and watch plan had earlier come to the relief of consumers as there was no revision during the period when the price of crude oil was rising sharply due to reduction in US production and inventory and demand. This would have required an increase of about Re 1 in the price of petrol and diesel.
Petrol price in Mumbai increased by 21 paise to Rs 107.99 per liter, while the price of diesel increased to Rs 97.80 per litre. Across the country too, petrol and diesel increased by 20-30 paise per liter, but their retail rates varied depending on the level of local taxes in the state.
Fuel prices in the country are hovering at record highs due to 41 increase in its retail rates since April this year. It dropped on a few occasions but remained largely stable. After rising above a three-year high of $80 a barrel earlier this week, the global benchmark has now fallen to $78 a barrel.
Oil rates are up 2 percent for the week and this is the fifth weekly gain. Since September 5, when the prices of both petrol and diesel were revised, the price of petrol and diesel in the international market is around $6-7 per barrel higher than the average prices during August.
As per the pricing formula adopted by the oil companies, the rates of petrol and diesel are to be reviewed and revised by them on a daily basis. The new prices are effective from 6 am. Daily review and revision of prices is based on the average price of the benchmark fuel in the international market and foreign exchange rates over the past 15 days.
However, volatility in global oil prices has prevented OMCs from following this formula in its entirety and revisions are now being carried out with longer intervals. It has also prevented companies from increasing fuel prices whenever there is a mismatch between their arrival globally and the pump price of fuel.
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