Retail prices of diesel and petrol are likely to maintain their upward rally as international crude prices have rebounded in May.
On Tuesday, the price of petrol crossed the ₹99-per-litre mark for the first time in Mumbai, where the price of diesel also crossed the ₹90-per-litre mark last week.
Demand
Simultaneously, Brent crude crossed the $70-per-barrel on Tuesday for the first time since March. Crude prices had stabilised around $65 per barrel in April, but they once again started rising in May.
“The international crude demand is looking increasingly good with lockdowns being lifted in Europe and North America,” said Anuj Gupta, VP Research, IIFL Securities. “If the crude prices sustain at $70-per-barrel, retail prices of petrol and diesel in India are likely to rise by another 1-2 rupees.”
Record-high retail prices of diesel and petrol have also been on an upward climb as oil marketing companies seek to bridge the gap with higher global crude prices after a hiatus in price revisions that had roughly harmonised with the March-April state election season.
On a year-on-year basis, the price of petrol has now risen 30 per cent in both Delhi and Mumbai. Diesel prices have also risen similarly.
“Every dollar rise in crude prices leads to a rise of 55-65 paise in domestic retail prices,” said Prashant Vasisht, Vice-President, Corporate Ratings at ICRA. “The price of LPG cylinders will also rise if crude remains strong.”