Immediately following the final round of crucial state assembly elections in five states, fuel prices are expected to rise. This week, there is a likelihood that petroleum prices will rise as oil companies pare losses from holding rates steady over four months ahead of assembly elections in five states, including Uttar Pradesh, despite international Petrol Diesel price soaring to a 13-year high.
Petrol Diesel Price Hike News Today
The US benchmark oil price, West Texas Intermediate, rose to USD 130.50 per barrel on Sunday before tumbling downward. Brent crude made its highest point since July 2008, hitting USD 139.13 at one point over the weekend. To make matters worse, the rupee fell to a new record low on Monday, falling to 76.9812 per dollar. It is dependent on overseas purchases for about 85 percent of its oil needs, making it one of the most susceptible countries to rising oil prices in Asia.
In addition to rising oil prices, the rupee’s weakness could upend a nascent economic recovery and escalate inflation in the country. Industry sources say fuel retailers need to raise the price of petrol and diesel by Rs 15 per liter to break even. In 2017, fuel prices were adjusted based on the 15-day average of the international benchmark rate. However, until November 4, 2021, prices have been frozen.
In recent weeks, the basket of crude oil that India buys has risen above US$111 per barrel, according to the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry. Four months ago, the price of crude oil for India’s basket of crude oils averaged USD 81.5 per barrel.
Why and How Much wilL Petrol Price will increase?
An industry official said that after the last round of polls ended on Monday, it was now anticipated that the government might allow state-owned fuel retailers to resume daily price revisions. Nevertheless, oil companies are expected to pass on only a small part of the loss at one time – raising prices by no more than 50 pence a liter every day.
Since Russia positioned its forces on the Ukrainian border last month, international oil prices have risen rapidly. Oil and gas prices spiked after Russia invaded the central Asian nation due to fears that its supplies might be disrupted by the conflict in Ukraine or retaliatory western sanctions.
Petrol Diesel News
So far, western sanctions have prevented energy trade between Russia and the west; however, the possibility of a full embargo of Russian oil and products is causing prices to surge. The world’s oil production is accounted for about 10% of the total production from Russia. About three-quarters of European gas is produced in Russia. About one-third of Russian gas shipments to Europe pass through Ukraine’s pipelines.
In contrast, Russian supplies only make up a small portion of Indian supplies. The amount of oil imported by India from Russia was 43,400 barrels per day in 2021 (almost 1% of its total imports). Still, coal imports from Russia were 1.8 million tonnes, accounting for 1.3 percent of all coal imports. Similarly, India purchases 2.5 million tonnes of LNG annually from Russian company Gazprom. At the moment, the supplies for India are not of great concern, but the prices are.
Petrol Price Increase
International trends directly influence fuel prices in India since India imports 85 percent of its oil needs. For the last 123 days, the fuel prices have remained the same. Due to electioneering for a new government in Uttar Pradesh, Punjab, and three other states, state-owned fuel retailers IOC, BPCL, and HPCL froze fuel rates early. A liter of petrol costs 95.41 rupees, and a liter of diesel costs 86.67 rupees in Delhi. The Delhi government has reduced the VAT rate and cut excise duty.
Petrol was costing Rs 110.04 a liter before these tax reductions, and diesel was costing Rs 98.42. If these new rates are maintained, Brent oil prices will skyrocket to USD 86.40 per barrel on October 26, 2021. As of November 5, 2021, the price of Brent was USD 82.74 a barrel before dropping to USD 68.87 by December.
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