International benchmark Brent crude fell below $90 a barrel last week for the first time since early February as fears of a recession weighed on demand. It has since recovered and is trading at $92.84 a barrel, its lowest in six months.
Prices fell despite the rally, with Russia keeping the North Stream pipeline offline and cutting output from producers OPEC and its allies (OPEC).
But this has not led to any revision in retail petrol and diesel prices in India and they remain on freeze for a record 158 days.
Responding to questions from reporters on no change in fuel prices, Oil Minister Hardeep Singh Puri on Friday asked state-owned fuel retailer to keep rates unchanged as international oil prices hit a multi-year high. No amendment was sought to be added for the loss of the sellers.
“When (international oil) prices were high, our (petrol and diesel) prices were already low. “Have we made up for all our losses?” He went to ask.
He, however, did not elaborate on the damage caused by keeping rates stable from April 6.
The crude oil basket imported by India averaged US$ 88 per barrel on September 8. It averaged USD 102.97 in April, rose to USD 109.51 in the following month and USD 116.01 in June. Prices started declining in July when the Indian basket averaged USD 105.49 a barrel. It averaged $97.40 in August and $92.87 in September so far.
State-owned fuel retailers Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) have not exercised their right to adjust the retail selling price of petrol and diesel at par with international cost. has done. Five months now to help the government manage runaway inflation.
once they were losing 20-25 per liter on diesel and 14-18 per liter on petrol due to increase in international oil prices. These losses have been reduced with the fall in oil prices.
“There is no under-recovery on petrol as of now. For diesel it will take some time to reach that level,” an official said.
But this is unlikely to lead to an immediate reduction in rates as it would allow oil companies to make up for losses incurred by selling fuel at lower prices in the last five months, another official said.
Puri had said on Friday that international oil prices needed to remain at $88 a barrel or fall further to provide some relief.
India is 85 per cent dependent on imports to meet its oil requirements and hence retail pump rates are directly dependent on developments in global markets.
IOC, BPCL and HPCL are to revise the retail price of petrol and diesel on a daily basis as per the cost. But they fixed rates for a record 137 days from November 4, 2021, just as states like Uttar Pradesh had voted.
That freeze ended on March 22 this year and rates went up 10 per liter each in a fortnight just before a new freeze comes into force from April 7.
Petrol price at present 96.72 per liter and diesel 89.62 in the national capital. it’s from below 105.41 per liter price on April 6 for petrol and 96.67 per liter for diesel as the government cut excise duty to cool rates.
Officials said an increase of 10 liters per liter between March 22 and April 6 was not enough to cover the cost and the new freeze meant accumulation of more losses.
Oil companies did not revise rates to help the government manage inflation, which had already reached a year-high. If the prices of petrol and diesel were increased commensurate with the cost, it would have increased further.
The freeze meant that the three retailers posted a combined net loss of 18,480 crore in the June quarter.
Petrol was deregulated in June 2010 and diesel in November 2014. Since then, the government does not provide any subsidy to oil companies to compensate for the losses incurred by selling fuel at below cost rates.
Therefore, oil companies make up for losses when input costs fall, the first official explained.
Russia’s February 24 invasion of Ukraine sent shock waves through global energy markets. The rise in early prices turned into muted prices as the global community imposed sanctions on key exports from Russia. Brent was at US$90.21 a barrel before the attack and hit a 14-year high of US$140 on March 6.
Some of the heat from oil markets in recent weeks has stemmed from fears of a downturn in demand. China has seen a 9 per cent drop in crude oil imports last month as the country’s zero-Covid policy imposed a complete or partial lockdown of over 70 cities since late August.
This story has been published without modification in text from a wire agency feed.
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