Indian fuel retailers raise prices again on Tuesday
Premium- This price increase comes in the backdrop of the 17th ministerial meeting of Opec-plus grouping on Tuesday
Transportation fuel prices in India continued with their upward streak, with state run oil marketing companies (OMCs) raising petrol and diesel prices in the backdrop of a rally in global crude oil prices.
This comes in the backdrop of the 17th ministerial meeting of Organization of the Petroleum Exporting Countries (Opec)-plus grouping on Tuesday. After the Opec-plus grouping’s decision to retain supply curbs, India, the world’s third-largest oil importer had earlier expressed its displeasure to Opec for ‘backtracking’ on its commitments.
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With state run OMCs raising petrol and diesel prices by 26 paise per litre and 23 paise per litre respectively in Delhi on Tuesday, petrol and diesel was selling at record highs of ₹94.49 per litre and ₹85.38 per litre respectively in the national capital at Indian Oil Corporation Ltd's outlets.
After remaining benign, petrol and diesel prices have spiked by ₹4.09 per litre and ₹4.65 per litre respectively since the results for the assembly elections in West Bengal, Assam, Kerala, Tamil Nadu, and Puducherry were announced on 2 May. There are some parts of the country wherein petrol prices have already crossed ₹100 per litre.
The global crude oil prices rallied on Tuesday, with the benchmark Brent crude trading at $71.08 per barrel, and the West Texas Intermediate was at $68.55 a barrel, the highest in two and a half years at the time of writing this story.
The crude oil prices have been on a roller coaster. Brent crude had hit a 21-year low, and the US oil futures slumped to negative for the first time in April last year as the glut induced by worldwide lockdowns overwhelmed the world’s limited storage facilities, triggering massive selling by traders due to the coronavirus pandemic.
The cost of the Indian basket of crude, which comprises Oman, Dubai and Brent crude, was at $68 a barrel on 31 May. Following the covid outbreak, crude prices for Indian basket of crude had plunged to $19.90 in April last year during the first wave before recovering to $66.95 a barrel in May, data from the Petroleum Planning and Analysis Cell showed.
India has maintained that it will source crude oil from any country, that offers cheaper and favourable terms. The Indian government is working on diversifying the country’s energy basket with crude oil supplies from non-Opec sources, after the Opec-plus grouping’s decision to retain supply curbs.
India is particularly vulnerable as any increase in global prices can affect its import bill, stoke inflation and widen trade deficit. India spent $101.4 billion on crude oil imports in 2019-20 and $111.9 billion in 2018-19. It is a key refining hub in Asia, with an installed capacity of over 249.36 million tonnes per annum (mtpa) through 23 refineries.
Indian Oil Corporation recently said its capacity utilization, which had reached 100% in last November, has come down to 84%, as states across the country have imposed lockdowns. Energy consumption, especially electricity and refinery products, is usually linked to overall demand in the economy.
Capacity utilization at IOC, the country’s largest oil refiner, had shrunk to around 35% at the beginning of the lockdown during the first wave of the pandemic last year, due to India’s petroleum product demand nosediving.
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