With crude oil prices hovering at USD 114 a barrel, the Oil Marketing companies are all set to drop a ‘Petrol Bomb’ on consumers after March 10—the day when results of all assembly elections would be declared.
If sources in the industry are to be believed, the minimum price of petrol and diesel may go up by Rs 5 a litre. It might go up as high as Rs 10 a litre if the tension between Russia-Ukraine does not ease by then.
“There is another possibility that government might reduce the excise duty on petroleum products. However, either way minimum increase of Rs 5 a litre appears to be imminent,” sources in the Oil Marketing Companies revealed.
“Petrol prices have gone up from USD 66.80 a barrel in August last year to as high as USD 114 a barrel—this is straight away an increase of around 70 % in just seven months. According to a rough estimate increase of every dollar a barrel costs Rs 0.50 a litre more to OMCs,” the officer said.
In United States average gasoline prices have gone up by almost 17 % this year, up from USD 3.28 a gallon to USD 3.87 a gallon. In 2021 along the average galoline prices in USA has increase from USD 2.25 a barrel to USD 3.28 a barrel–an increase of 45 % in 2021 and 72 % since January 2021.
Even in Pakistan petrol prices were increased recently by Rs 12 a litre from Rs 145 a litre to Rs 159 a litre. “You can make out the pressure on Oil Marketing Companies from the fact that after increasing Rs 12 a litre, Pakistan is going for another increase in petrol prices,” the officer said.
The expert in the Petroleum Industry are of the view that OMCs are waiting for a green signal from the Union Petroleum Ministry to hike the price, which they probably get once the assembly elections are over this week.
There are two factors which are hurting Indian OMCs, one they have hardly increased any price for the past seven months, and two international crude prices have registered a steep increase this month in wake of Russia-Ukraine conflict.
“If the conflict escalates and oil from Iran does not come into the market or Oil Exporting Counties does not increase production, the industry expects the crude oil price to touch USD 140 a barrel,” the officer said.
The only solace Industry has is reduction in oil demand in the coming months from USA and European countries as the summer is reduce gas and oil consumption in these countries.