Need for sharp fuel price hike eases as oil dips below $100 – Times of India

New Delhi: The government’s policy to avoid a jump in oil prices is paying off. Crude fell below $100 a barrel on Tuesday, prompting a sharp increase in pump rates or the need to cut taxes.
Global benchmark Brent crude settled at $98/barrel, slipping to $97.44 as a massive outbreak of Covid-19 in China sparked concerns over demand destruction and the resumption of nuclear talks with Iran. Moscow’s support to the U.S. eased supply concerns.
The fall in oil prices will ease the pain for fuel retailers by reducing their under-recoveries on petrol and diesel, which were nearly Rs 20 or more as Brent hit $139 a barrel on March 7. .
The ‘Indian basket’, or a blend of crude bought by Indian refiners, fell to $110.30 on Monday from a high of $128.24 on March 9.
The basket is expected to decline further in the coming days as it is a few days behind Brent. The price difference with Brent usually varies within $2-5/barrel, but could widen in case of a bounce.
This should bring under-recoveries to a level that retailers can tolerate for the remainder of the fiscal year and ease pressure on the government for another round of tax cuts, which affects its 2022-23 maths. .
Petrol and diesel prices have not been revised since November 4, when the Center cut excise duty on petrol and diesel by Rs 5 and Rs 10 per liter respectively, when crude oil stood at $83 a barrel.
On Monday, Oil Minister Hardeep Puri had mentioned the excise duty cut on November 4 and assured the Rajya Sabha that the government would do everything possible to protect consumers from fuel price shocks in the coming days.
On Tuesday, Minister of State for Finance Pankaj Choudhary reiterated to the House that the government would take “calibrated interventions” to keep fuel prices under check to protect the interests of the common man.
He said the government was keeping a close watch on the factors that decide fuel prices and would take calibrated interventions as and when required to protect the interests of the common man.
The ‘Crude Petroleum and Natural Gas, Fuel and Power’ subgroup in the Wholesale Price Index (WPI) is directly related to the volatility in crude oil prices, he said.