Petrol and Diesel Prices Set for Increase Amid Rising Global Crude Costs
Rising Fuel Prices on the Horizon
New Delhi: Following the increase in commercial LPG cylinder prices, petrol and diesel are next in line for a price hike. Government sources indicated on Friday that a rise in fuel prices cannot be ruled out in the near future. This comes as global crude oil prices have surged significantly.
Crude oil prices have reached their highest levels in four years this week, peaking at $126 per barrel before experiencing a slight decline. However, prices remain above $110 per barrel. The movement of ships through the Strait of Hormuz is still restricted, and tensions continue between American and Iranian leaders amid stalled peace talks.
Government sources have confirmed that an increase in petrol and diesel prices is likely in the near future.
Earlier in the day, Indian Oil Corporation released a statement indicating that despite a significant rise in international energy costs, there would be no increase in domestic LPG rates alongside petrol and diesel.
State-owned oil companies have raised prices for commercial LPG, industrial diesel, 5 kg LPG cylinders, and jet fuel sold to international airlines, considering the rising costs.
Analysts had previously suggested that after the conclusion of voting for the West Bengal Assembly elections on April 29, petrol and diesel prices could increase by up to ₹2528 per liter.
A significant spike in international oil prices occurred following attacks on Iran by the US and Israel on February 28, leading to a strong retaliation from Tehran. This has effectively closed the Strait of Hormuz, a crucial route for global energy supply, connecting the Persian Gulf to international markets. Approximately one-fifth of global oil trade passes through this strait, which is also a major route for liquefied natural gas transport.
What are the losses? Last week, a senior official from the Petroleum Ministry revealed in a press briefing that state-owned fuel retail companies are incurring losses of about ₹20 per liter on petrol.
For diesel, the loss is approximately ₹100 per liter due to the significant rise in global oil prices. Despite this, fuel prices at the pump have remained stable for nearly four years. However, the official also mentioned that there are currently no plans for a price increase. This month, crude oil prices have averaged above $114 per barrel, compared to $70 per barrel last year.
Retail petrol and diesel prices have remained unchanged since early April 2022, a period during which oil prices fluctuated. When prices fell, government oil companies made substantial profits, which they used to offset losses incurred when prices rose.
Currently, petrol in Delhi is priced at ₹94.77 per liter, while diesel costs ₹87.67.
Petroleum Minister Hardeep Singh Puri addressed the situation during an event in Gujarat, stating that the closure of the Strait of Hormuz has caused serious disruptions in global energy supply. Nevertheless, India has managed to maintain domestic supply stability, shielding consumers from international price shocks.
Speaking at the 'Vibrant Gujarat Regional Conference' in Surat, Puri noted that despite supply disruptions lasting 60 days due to the West Asia crisis, India remains resilient.
He explained that the government has adjusted fiscal measures to prevent global shocks from directly impacting consumers. Since the onset of the crisis, daily monitoring of crude oil, LNG, LPG, petrol, diesel, and aviation fuel supplies has ensured uninterrupted availability across the country.
Puri emphasized that no country can remain unaffected by disruptions in key global supply chains and products, which can lead to increased transportation and insurance costs, delays in supply, and difficult decisions for nations.