With worldwide Brent crude oil prices sustaining more than $80/barrel in the last couple of days, state-run oil marketing and advertising firms (OMCs) have enhanced retail costs to new record-higher levels.
Pump price tag of petrol in Delhi was Rs 102.64 per litre on Tuesday and diesel, crossing the Rs 91-mark for the initially time, was sold at Rs 91.07/litre. The price tag hikes was inevitable as international crude oil costs enhanced by about $5 per barrel in between September 5 and September 23, when retail auto fuel costs had been kept unchanged.
Retail petrol costs had been also kept unchanged (at Rs 101.84/litre in Delhi) in between July 17 and August 21, when worldwide crude corrected from about $73/barrel to about $65/barrel in the identical period.
International crude prices began increasing following hurricane Ida slammed into the US Gulf Coast in the course of the last week of August. This had helped OMCs strengthen their marketing and advertising margins to Rs 3.2/litre and Rs 4.6/litre for petrol and diesel, respectively, analysts had stated.
Apparently, the OMCs had been deferring cuts in fuel costs to make up for the losses suffered in between late February and May, when they could not hike the costs in conformity with the crude movements, due to Assembly elections in 4 states and the UT of Puducherry. The marketing and advertising margin on petrol was nearly zero on July 20, and the margin on diesel was Rs 2.9/litre.
Analysts at Kotak Institutional Equities had estimated OMC marketing and advertising margins to have enhanced additional to Rs 4.7/litre for petrol and Rs 6.6/litre for diesel as on September 7.
At present, the costs charged to dealers by Indian Oil Corporation are Rs 41.63/litre for petrol and Rs 42.58/litre for diesel. The Centre’s tax (standard excise, surcharge, agri-infra cess and road/infra cess) is at present Rs 32.9 per litre for petrol and Rs 31.8 per litre for diesel, when Delhi state VAT is Rs 23.5 per litre on petrol and Rs 13.2 per litre on diesel.
In March and May 2020, surcharge and cess on auto fuels had been cumulatively enhanced by Rs 13 per litre on petrol and Rs 16 per litre on diesel, top to record-higher auto fuel prices.