3 International oil prices have been rising gradually, adding to the petroleum price rally

International crude prices fell sharply after the pandemic, as economic activity and fuel consumption plummeted with lockdowns and travel restrictions across the globe. Oil prices have started regaining momentum with vaccine roll-outs across the world. Price of India’s crude oil basket has increased by 26% to $54.79 per barrel between November 2020, when most Covid-19 vaccines were approved, and January 2021. It is this rise in international crude prices which has been driving petrol-diesel prices in the past few months.

Although, oil prices are still significantly lower than what they were before the pandemic erupted, they are expected to increase compared to what they were in 2020. If international crude prices continue their upward trajectory, base price of petrol and diesel will keep increasing, which will entail another source of tailwinds in addition to higher taxes.