Crude oil rally pushes up fuel prices to new record
A rally in the price of crude oil is pushing domestic petrol and diesel prices towards new highs. Petrol was hiked by 20 paise per litre and diesel by 25 paise a litre on Tuesday. After the revision, petrol sold at ~101.39 a litre while diesel retailed at ~89.57 in the National Capital.
The highest selling price for petrol is ~101.84 a litre and for diesel it is ~89.87 a litre. Prices remained at these levels for most of July 2021 and softened moderately in August 2021.
The Indian basket of crude oil, an estimate of the price at which domestic refiners bought crude oil, averaged $71.63 a barrel in July and $73.46 a barrel in August. It stood at $76.89 a barrel on September 27, according to the Petroleum Planning and Analysis Cell.
Brent crude oil, a benchmark for nearly 80 per cent of global crude oil trade, crossed $80 per barrel on Tuesday. It was trading at $71.59 on September 1. This rise is on the back of supply concerns about Organization of the Petroleum Exporting Countries’ (OPEC’S) ability to meet the rising demand.
For consumers, roughly every dollar rise in crude oil prices results in 30 to 50 paise hike in petrol and diesel prices. Correspondingly, oil companies had started to increase retail prices of diesel from September 24. Before this, retail price of diesel was last increased on July 15. On the other hand, increase in retail price of petrol was not undertaken by oil companies till Tuesday. The last hike in retail price of petrol was carried out on July 17. According to a public sector oil firm official, reports are pointing towards supply tightness that continues to draw on inventories and rising gas prices are helping drive oil higher.
OPEC+ is also facing difficulties increasing production as underinvestment or maintenance delays persist from the pandemic. “Crude oil prices have reached near three-year high as global output disruptions have forced energy companies to draw more crude oil out of their stockpiles. Accordingly, US crude oil inventory levels are also nearing a three-year low,” the official said.