The prices of petrol and diesel have each been hiked by about Rs 9.2 per litre over the past 15 days, but are expected to rise further as oil marketing companies (OMCs) revise prices in line with rising crude oil prices. How much are petrol and diesel prices expected to further rise? Experts have noted that the retail price of petrol and diesel need to be hiked by Rs 0.52-0.60 for every $1 per barrel rise in the price of crude oil for OMCs to maintain normal marketing margins on the sale of auto fuels. The price of Brent crude has risen by about $28.4 per barrel since November 4 to $108.9 per barrel, indicating that fuel prices could see further hikes of Rs 5.5-7.8 per litre each on petrol and diesel at the current price of Brent Crude. OMCs had, on November 4, halted price revisions for a 137 day period, which included state Assembly elections in Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa. "For every $1 increase in crude oil prices at current tax rates, the retail price of petrol and diesel should increase by 60 paise,” said Prashant Vasisht, Vice President & Co-Group Head at credit ratings agency ICRA. The Centre may, however, choose to reduce the impact of higher crude oil prices on consumers by cutting excise duty on both petrol and diesel. Despite a Rs 5 per litre cut in excise duty on petrol and a Rs 10 per litre cut in excise duty on diesel in November 2021, central taxes are higher by Rs 8 per litre on petrol and by Rs 6 per litre on diesel compared to pre-pandemic levels. Central and state taxes currently account for about 43 per cent of the retail price of petrol and about 37 per cent of the pump price of diesel in the Delhi. OMCs also hiked the price of LPG by Rs 50 last week, taking the price of the cooking fuel to Rs 949 per 14.2 kg cylinder in the capital. Analysts have noted that OMCs are still making losses on LPG sales at current price levels due to the high crude oil prices. Why is there a sudden rise in fuel prices? OMCs had held the prices of petrol and diesel constant for a period of 137 days starting November 4, after the Centre announced an excise duty cut of Rs 5 per litre on petrol and a cut of Rs 10 per litre on diesel. The entire impact of the rise in international crude prices during the period is being passed on to consumers now, as OMCs have restarted price revisions. The price of petrol has risen to Rs 104.6 per litre and the price of diesel has risen to Rs 95.9 in the capital after 13 price hikes in 15 days. Ordinarily, the prices of petrol and diesel are revised daily, in line with a 15-day rolling average of benchmark international prices of petroleum products. The Russia-Ukraine conflict and attacks on oil and gas infrastructure in Saudi Arabia have led to further concerns about potential disruptions in crude oil supplies which have pushed up crude oil prices. Newsletter | Click to get the day's best explainers in your inbox
