Diesel price at record high ₹61.74/L, petrol above ₹71

PRODUCTION CUTS BY CARTEL ORGANIZATION OF THE PETROLEUM EXPORTING COUNTRIES & RUSSIA CONSTRAINED SUPPLIES, RESULTING IN SURGE IN CRUDE PRICES

NEWDELHI: Diesel price rose to an all-time high on Monday as crude oil price continued to advance in global markets, impacting India’s oil import bill and inflation.

Diesel touched ₹61.74 a litre in Delhi, while petrol hit ₹71.18 a litre, the highest since August 1 2014, according to information provided by the largest refiner Indian Oil Corp. Ltd.

Crude oil price surged in global markets as production cuts by cartel Organization of the Petroleum Exporting Countries (OPEC) and Russia constrained supplies. Crude oil accounts for about 90% of the production cost of auto fuel.

Indian basket of crude oil has risen by 64% since June to $76.26 as on Monday, impacting the country’s oil import bill and inflation.

According to information available with the commerce ministry, the oil import bill rose 28% in December to ₹66,464 crore from the same time a year ago.

Fuel inflation accelerated to 9.16% in December against 8.82% in the previous month, according to figures released on Monday by the Central Statistics Office.

The surge in fuel price limited the benefit that falling wholesale food prices had on wholesale price index-based inflation, which eased to 3.58% in December from 3.93% in the previous month.

Experts said that oil prices will cool off over the next few months once the current rally loses steam. “Crude oil price may remain firm in world markets for a couple of months. But once shale oil producers from the US ramp up production taking advantage of the viable price levels, supplies will improve, helping prices to stabilise,” said K Ravichandran, senior vice-president and group head-corporate ratings at ICRA Ltd.

India has been trying to diversify its sources of oil supplies and add renewable sources as well as biofuels into its energy mix to tackle possible price shocks.