NEW DELHI: Hopes of any respite from rising fuel prices fell short on Monday after a bitter dispute between Saudi Arabia and the United Arab Emirates stalled an OPEC-plus output deal, amid a recovery in demand. Supply likely increased and oil prices rose.
The group skipped a meeting without announcing any possible date to bring the two warring veterans on the same page.
The UAE is opposing a Saudi proposal to extend the current deal to 2022 with a phased increase in production and is demanding a higher baseline for its production quota.
Riyadh thinks the global economic recovery is still difficult and wants the deal to be extended to keep the market in balance. He is also opposing an amendment to the baseline for one member as it would prompt others to demand it.
An immediate consequence is that August’s supply will not increase as expected. This will strengthen the market especially in the form of increase in demand from the US, Europe, China and India.
Global benchmark Brent crude rose 1% to near $77 a barrel, the highest since 2018. Several investment banks recently pegged oil at $80 a barrel.
This means pump prices will continue to rise until the Center reduces the taxes it raised last year. India’s purchase cost of crude oil has increased from about $60 a barrel in January to about $75.
As a result, petrol is currently selling at Rs 100 per liter and diesel is heading towards a century in most parts of the country, helped largely by a sharp increase in taxes last year.
The Center raised excise duty on petrol by Rs 13 and on diesel by Rs 16 between March and May last year, when oil prices fell due to the pandemic.
The two hikes raised excise duty on petrol by 65% from Rs 19.98 to Rs 32.98 per liter and on diesel by 79% from Rs 15.83 to Rs 28.35. These higher taxes are compounding the impact of rising crude oil prices, with petrol prices above Rs 100 per liter and diesel above Rs 90 in most parts of the country.
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