Rising crude oil prices push up rates of refined products such as petrol and diesel, which have already risen by Rs 2.6 per litre and Rs 3.4 per litre, respectively, in three weeks in the domestic market.
Since the beginning of November, crude oil prices have risen about $11 a barrel, or 28%, to $50 a barrel mainly on hopes that a quick vaccine roll-out across nations could help contain the coronavirus and its damaging impact on fuel demand. Some countries have already approved vaccines while others are considering such requests from pharma companies.
An oil demand pickup is showing up in India too with petrol sales rising above pre-covid levels. The demand for diesel and jet fuel has also vastly improved since April but is still lower than last year’s. Refinery runs have also recovered with facilities at Indian Oil, the nation’s largest refiner, running at full capacity.
Rising international rates have forced state oil companies to raise domestic fuel prices. Petrol now costs Rs 83.71 per litre in Delhi, just a tad lower than the record rate of Rs 84 per litre registered on October 4, 2018. Diesel is selling for Rs 73.87 per litre. In Mumbai, petrol and diesel cost Rs 90.34 and Rs 80.51 a litre, respectively. Rates have been static for the past four days after rising almost daily since November 20.
State oil companies are expected to daily revise domestic rates of petrol and diesel to align them with international rates. But in 2020 companies haven’t quite followed this, keeping rates static for weeks and months, making domestic price predictions harder.
Domestic prices are near-record levels also because of steep rise in taxes.