Oil prices at 7-month low but petrol, diesel prices unchanged in India

Oil prices at 7-month low but petrol, diesel prices unchanged in India

The basket of crude oil that India imports averaged $88 per barrel on September 8.

New Delhi:

International oil prices hit seven-month lows but no change in retail gasoline and diesel prices in India as state-owned fuel retailers offset losses due to holdings in a record five months despite rising costs.

International benchmark Brent crude fell below $90 a barrel last week for the first time since early February as recession fears hit demand. Since then, it has recovered and is trading at $92.84 a barrel, a six-month low.

Prices fell despite positive developments, including Russia keeping the Nord Stream pipeline offline and OPEC producers and their allies (OPEC) cutting output.

But this has not resulted in any correction in the retail prices of petrol and diesel in India and they have continued to be frozen for a record 158 days.

Responding to reporters’ questions about no change in fuel prices, Oil Minister Hardeep Singh Puri on Friday sought to link the no-modification to the damage suffered by home-owned fuel retailers. countries suffered in keeping the exchange rate unchanged as international oil prices rose to multi-year highs.

“When (international oil) prices were high, our (gasoline and diesel) prices were already low,” he said. “Have we made up for all our losses yet?” he continued to ask.

However, he did not elaborate on the damage incurred by keeping rates steady since April 6.

The basket of crude oil that India imports averaged $88 per barrel on September 8. It averaged $102.97 in April, before rising to $109.51 the following month and 116.01 USD in June. Prices started to fall in July when the Indian basket averaged 105.49 USD/barrel. It averaged $97.40 in August and $92.87 in September so far.

State-owned fuel retailers Indian Petroleum Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) have not exercised their right to adjust retail prices of gasoline and diesel has been in line with international costs for more than five months now to help the government manage runaway inflation.

At one point, they lost Rs 20-25 per liter for diesel and Rs 14-18 per liter for gasoline as international oil prices skyrocketed. These losses were cut as oil prices fell.

“There is no loss below recovery (loss) for gasoline. For diesel, it will take some time to get there,” an official said.

But this is unlikely to translate into an immediate rate cut as oil companies will be allowed to recoup the losses they have accrued from selling fuel at lower prices over the past five months, another official said. said.

On Friday, Puri stated that international oil prices need to stay at $88 per barrel or fall below it to ease.

India is 85% dependent on imports to meet its oil needs and therefore the retail pumping rate is directly dependent on developments in the global market.

The IOC, BPCL and HPCL are required to adjust the retail prices of petrol and diesel on a daily basis to match costs. But they have frozen the rate for a record 137 days starting on November 4, 2021, just as states like Uttar Pradesh go to the polls.

That freeze ended on March 22 this year and the rate rose by Rs 10 per liter per liter in just over two weeks before the new freeze came into effect from April 7.

Gasoline is currently priced at Rs 96.72 per liter and diesel at Rs 89.62 in the national capital. This is down from the price of Rs 105.41 per liter on April 6 for petrol and Rs 96.67 per liter for diesel due to government excise tax cuts to lower temperatures.

The increase of Rs 10 per liter, effective from March 22 to April 6, is not enough to cover the costs, and the new freeze means more losses will accrue, officials said. , the officials said.

Oil companies have not revised interest rates to help the government manage inflation that has peaked for years. It will skyrocket if gasoline and diesel prices increase in proportion to costs.

The freeze means the three retailers reported a combined net loss of Rs 18,480 crore in the June quarter.

Petrol was deregulated in June 2010 and diesel in November 2014. Since then, the government has not paid oil companies any subsidies to compensate for the losses they have may incur when selling fuel at a price below cost.

So oil companies will make up for losses when input costs fall, the first official explained.

Russia’s February 24 invasion of Ukraine sent shockwaves through global energy markets. The initial spike in prices turned into a protracted rally as the global community imposed sanctions on key Russian exports. Brent was at $90.21 a barrel before the invasion and rose to a 14-year high of $140 on March 6.

Some heat has radiated out of the oil market in recent weeks on fears that a recession will cut demand. China saw crude oil imports fall 9% last month as the country’s zero-Covid policy has resulted in full or partial closures in more than 70 cities since the end of August.

(Except for the title, this story has not been edited by NDTV staff and is published from an aggregated feed.)

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