Fuel prices to rise further in coming days

Our BureauNew Delhi, May 6 New Delhi | Updated on May 06, 2021

On Thursday, diesel in Delhi was priced at ₹81.42 per litre   -  PTI

OMCs are hiking the price to catch up with the rise in global crude oil prices

After three consecutive hikes this week, public sector oil marketing companies (OMCs) are likely to soon go in for further increase in the retail prices of petrol and diesel.

The next set of price increase is part of their efforts to catch up with the rise in global crude oil prices in recent weeks, when the OMCs were unable to keep in step with the global price trends partly due to assembly elections in five States in March-April.

On Thursday, diesel in Delhi was priced at ₹81.42 per litre, having risen by 69 paise since the election results in West Bengal, Tamil Nadu, Assam and Puducherry was announced on Sunday. The price of petrol similarly rose by 59 paise to ₹90.99 per litre.

“Retail prices are likely to rise by 3-4 per litre given the roughly $5 rise in Brent since the start of March that is yet to be passed on,” said Prashant Vasisht, Vice-President, Corporate Ratings at ICRA.

Brent crude

Brent crude has been hovering around $70 per barrel and is expected to rise further to $73-75 per barrel, said Anuj Gupta, Analyst at Angel Broking.

“Despite the sharp fall in the Indian demand due to the ongoing second wave of Covid, OPEC has taken a positive demand outlook betting on increased economic activity in the US and China,” Gupta said.

The OMCs are further incentivised to raise retail prices because the fall in demand will also squeeze their gross refining margins as the per-barrel processing cost will rise, Vasisht said, adding that they would also seek to recoup the losses made by keeping prices lower during the hiatus period.

Opposition cries foul

“We have been saying that the Centre will increase the prices soon after the West Bengal Assembly polls. This is exactly what has happened. The inflation has gone up as a result. This shows what is the government’s priority,” said the Congress party’s spokesperson Supriya Shirnate. Having already earned ₹24-lakh crore by increasing the excise duty, the government is “breaking the back of people,” she added.

In the first half of 2020, when crude prices had slumped, the Central government hiked the duty the duty to a record high. Ever since Prime Minister Narendra Modi’s government assumed office in 2014, it has raised Central taxes on petrol and diesel by nearly 350 per cent and 894 per cent. The government refused to lower the duty even as retail fuel prices skyrocketed in the January-February period.

Published on May 06, 2021

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