The prices of petrol and diesel have once again increased in the country. On Tuesday, in a move to increase fuel prices, prices of both petrol and diesel were increased by about 90 paise per litre. The new prices came into effect from Tuesday itself; This is the second increase in fuel prices in just five days. After this latest increase, questions are being raised whether oil companies will continue the trend of price increases seen in 2022. Regarding the strategy of oil companies regarding increase in prices of petrol and diesel, Indian Oil Corporation (IOC) itself has now clarified the situation. Officials have said that no exact figure has been decided yet regarding the total increase in prices.
Earlier, petrol and diesel prices in the country were increased on May 15 – the first such hike in almost four years. Oil companies had increased prices by ₹3 per litre. Then, on Tuesday, May 19, consumers got another inflationary shock when petrol and diesel prices were increased for the second time by 90 paise per litre. After these two consecutive hikes, petrol prices in Delhi have now reached ₹98.64 per litre, while diesel prices have reached ₹91.58 per litre. At the same time, petrol prices in Mumbai have reached ₹ 107.59 per liter and diesel prices have reached ₹ 94.08 per liter.
‘It is not clear how much it will cost…’
Following the double hike in petrol and diesel prices, a senior official of state-owned oil company IOCL said the company is gradually increasing fuel prices in an attempt to minimize the impact on consumers and keep inflation under control. “We are making every effort to protect consumers as much as possible,” the official added.
Apart from this, officials said that it is difficult to predict exactly how much the prices of petrol and diesel will increase in the future. He explained that the company has not yet set a specific target for the overall increase in fuel prices, even though input costs are rising rapidly due to the impact of the ongoing conflict in West Asia.
“We don’t want to implement it all at once, because doing so will have a negative impact on inflation,” an official told *Informist*. Our prices are set on a specific cycle, and instead of focusing on quarterly profits, we try to maximize savings for our customers. The final decision on the overall extent of price increase will be taken at the highest level; However, considering the current global situation, this increase was considered necessary.
Why were the prices of petrol and diesel increased?
An IOCL official said that the decision to increase the prices of petrol and diesel was taken purely for global geopolitical reasons. He noted that the ongoing conflict in the Middle East – as well as the fear of the potential closure of the Strait of Hormuz – has led to a sustained rise in crude oil prices. The official further said that despite the increase in prices, there is no expectation of fuel demand slowing down; It is estimated that demand for fuel will remain strong even in the summer months.
**Will the trend of price increase remain the same as in 2022?**
During the Russia-Ukraine conflict – when crude oil prices were at their peak – oil companies raised prices of petrol and diesel for 13 consecutive days between March and April 2022. During this period, prices were increased by 80 paise on 10 separate occasions. At that time, Indian Oil had increased the prices of petrol and diesel by ₹10 per liter in just 15 days. When the official was asked whether the same trend would be repeated this time too, he clarified that he did not see any similarity with the price hike in 2022. On the other hand, this increase in the prices of petrol and diesel after a gap of four years has increased the risk of inflation in the country. Barclays estimates that the initial ₹3 per liter increase in prices will have the effect of increasing CPI inflation by 15 basis points in June and by 8 basis points in May.
