Petrol and diesel prices on Thursday were reduced for the first time in over two months because of a drop in the cost of production, according to state-owned oil firms.

Petrol price was cut by 21 paise a litre and diesel by 11 paise, a price notification issued by state retailers said.

This is the first price cut arising from a drop in international oil prices.

The rates were reduced by a minimum Rs 2.50 a litre across the country on October 5 , when the government cut excise duty on petrol and diesel by Rs 1.50 a litre and asked oil PSUs to subsidise the fuels by another Re 1 a litre. The reduction in BJP-ruled states was more as they matched this cut by an equivalent reduction in local sales tax or VAT.

Petrol in Delhi now costs Rs 82.62 per litre as against Rs 82.83 a litre previously. A litre of diesel now costs Rs 75.58 as compared to Rs 75.69 previously.

In Mumbai, petrol now costs Rs 88.08 per litre and diesel Rs 79.24.

The price cut follows international oil prices trading near the lowest level in a month on a bigger-than-expected gain in American stockpiles.

Prior to Thursday’s cut in rates, diesel price had risen by Rs 2.74 per litre since October 5 to more than wipe away the excise duty cut and oil firm subsidy. Petrol price had during this period risen by Rs 1.33 a litre.

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