Amid the ongoing conflict in Iran and tensions in West Asia, petrol and diesel prices in India have increased four times in the last one month. With these hikes, petrol and diesel prices have collectively increased by ₹7.5 per litre. This increase in prices has happened after a long gap of four years due to tension in the Middle East.
However, despite these hikes, state-owned oil companies are still making losses of about ₹5.5 per liter on petrol and ₹4.5 per liter on diesel. Overall, companies are still losing more than ₹550-600 crore daily – a situation that cannot continue for long.
Will prices increase by another ₹5?
ICRA and financial analysts believe that oil companies may have to increase retail prices by ₹5 per liter to reach the ‘no-profit, no-loss’ situation. While analysts consider this increase necessary, the government is avoiding approving the full increase immediately to control retail inflation. As an alternative, the government has tried to shoulder this burden by reducing excise duty.
crude oil prices
India imports about 85% of its crude oil needs. At present, the price of Brent crude remains around $92-95 per barrel. This price level is manageable for Indian oil companies, so there is no immediate need for them to increase retail prices. Generally, upward pressure on prices builds when crude oil crosses the $100 per barrel level and remains at that level for several weeks; At present, there is no such serious situation.
