NEW DELHI: Retail prices of petrol hit a new record high on Thursday in the national capital with oil marketing companies (OMCs) raising pump prices by 35 paise a litre to ₹86.65. Diesel prices were also up 35 paise a litre, selling at ₹76.83 a litre in Delhi.
Having held rates steady for 29 days, OMCs began raising auto fuel prices since early January. Petrol and diesel retailed at a record high in Mumbai as well, at ₹93.20 a litre and ₹83.67 a litre respectively.
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Diesel had touched an all-time high of ₹81.94 a litre on 30 July in the nation capital.
The cost of the Indian basket of crude, which comprises Oman, Dubai and Brent crude, was at $55.18 a barrel on 1 February. Following the covid outbreak, crude prices had plunged to $19.90 in April before recovering to $49.84 a barrel in December, data from the Petroleum Planning and Analysis Cell showed. It averaged at $56.43, $69.88 and $60.47 per barrel in FY18, FY19 and FY20, respectively.
The benchmark Brent crude traded at $58.62 per barrel in Asian deals on Thursday, while the West Texas Intermediate was at $55.92 a barrel at the time of writing this story.
Oil prices have been on an upswing after the Organization of the Petroleum Exporting Countries (Opec)-plus meeting on 3 February decided to continue with output curbs. The Opec-plus decision is significant for India as production from the cartel makes up for about 40% of global output and 83% of India’s oil imports.
“The Committee noted that since the April 2020 Ministerial Meeting, OPEC and non-OPEC countries have adjusted oil production down by a cumulative 2.1 billion barrels, stabilizing the oil market and accelerating the rebalancing process,” Opec said in a statement on Wednesday.
This comes in the backdrop of the Indian government projecting a V-shaped economic recovery. The union budget presented on 1 February conservatively assumes a nominal GDP growth of 14.4%. The International Monetary Fund (IMF) has also upgraded its gross domestic product (GDP) projection for India to a contraction of 8% in FY21 from an earlier estimate of minus 10.3%, saying there are encouraging signs of economic recovery in high frequency indicators.
“The Committee observed that, while economic prospects and oil demand would remain uncertain in the coming months, the gradual rollout of vaccines around the world is a positive factor for the rest of the year, boosting the global economy and oil demand,” the Opec statement added.
The union government did not respond to calls to lower taxes on transportation fuels in the Union budget and introduced a new agriculture infrastructure development cess (AIDC) on petrol, diesel and several other imported items. While the new cess won’t place any additional burden on consumers, states are likely to lose some revenue. The cess was imposed with immediate effect on petrol ( ₹2.5 per litre), diesel ( ₹4 per litre) and 12 other agricultural and non-agricultural commodities. The budget also reduced basic customs duty and excise and special excise duties on these items.
In 2020-21, India, the third-largest oil importer globally, had raised taxes on petrol and diesel by ₹13 and ₹16, respectively, in two tranches, through a special additional excise duty, besides road and infrastructure cess. Central and state taxes, and dealers’ commission, are added to the refinery gate price of auto fuels to arrive at the retail price.
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 more than 249.36 million tonnes per annum (mtpa). It has 23 refineries and plans to increase its refining capacity to 400 mtpa by 2025.