The fuel prices increased simultaneously on Tuesday after a three-week break amidst volatility in global oil prices with benchmark crude shooting over three year high level of $80 a barrel.
Accordingly, diesel prices increased by 25p/litre in the national capital to Rs 89.57 per litre, while the petrol rates spiked by 20p/litre to Rs 101.39 after a break of 23 days, according to Indian Oil Corporation, country’s largest fuel retailer.
Diesel prices have now increased for third consecutive day and for the fourth time in the last five days taking up its retail price by 95p/litre in Delhi.
Diesel prices were raised on September 24 by 20p/litre and again 25p/litre each on Sunday and Monday.
Petrol prices had maintained stability since September 5, but oil companies finally raised its pump prices given a spurt in the product rates lately.
OMCs had preferred to maintain their watch prices on global oil situation before making any revision in prices. This is the reason why Petrol prices were not revised for last three weeks. But extreme volatility in global oil price movement has now pushed OMCs to effect the increase.
The wait and watch plan of the OMCs had come to the relief of consumers earlier as no revision came during a period when crude price were on the rise over shortfall in US production and inventories and a pick up in demand.
This would have necessitated about a Re 1 increase in petrol and diesel prices.
In Mumbai, the petrol price increased by 21p/litre to Rs 107.47 per litre, while diesel rates rose to about Rs 97.21/litre.
Across the country as well, petrol and diesel increased between 20-30p/litre but their retail rates varied depending on the level of local taxes in the state.
Fuel prices in the country have been hovering at record levels on account of 41 increases in its retail rates since April this year. It fell on few occasions but largely remained stable.
On Tuesday, global benchmark Brent crude rose over $80 barrel. Oil rates are up 2 per cent for the week and this is the fifth weekly gain.
Since September 5, the price of petrol and diesel in the international market is higher by around $6-7 per barrel as compared to average prices during August.
Under the pricing formula adopted by oil companies, rates of petrol and diesel are to be reviewed and revised by them on a daily basis. The new prices becomes effective from morning at 6 a.m.
The daily review and revision of prices is based on the average price of benchmark fuel in the international market in the preceding 15 days, and foreign exchange rates.
But, the fluctuations in global oil prices have prevented OMCs to follow this formula in totality and revisions are now being made with longer gaps.
This has also prevented companies from increasing fuel prices whenever their is a mismatch between globally arrived and pump price of fuel.