Oil companies raised petrol prices by 17 paise a litre and that of diesel by 21 paise on Monday after a 19-day gap.
As per estimates, state-owned oil marketing companies have lost around Rs 500 crore for the period that they absorbed the higher costs of petrol and diesel and the fall of the rupee against the U.S. dollar. It is worth mentioning since June 16, 2017, prices of petrol and diesel are being revised daily. In Chennai, the price of petrol is Rs 77.61 per liter, while diesel is priced at Rs 69.79 per liter, while in Kolkata it is Rs 77.50 per liter, while diesel has been priced at Rs 68.68 per liter. Apart from resulting in higher retail prices of petrol and diesel, higher oil prices increase India's oil import bill and shoots up current account deficit and also results in higher subsidy pay outs. Earlier, the government oil marketing companies used to review fuel prices twice a month. Petrol prices in Delhi were hiked to Rs 74.
"Around a million barrels of oil a day is likely to disappear from global oil markets if the US sanctions on Iran bite", said Greg McKenna, chief market strategist at futures brokerage AxiTrader in the report.More news: Alonso urges McLaren to kick on after season's best qualifying
The price hike now is to compensate for the loss incurred during this period.
However, their mysterious inaction in the last 20 days had led to speculation that the Union government was leaning on the companies to keep the rates unchanged so that the Bharatiya Janata Party could gain an advantage in the Karnataka election. It is not yet confirmed if the government had given a go-ahead to prominent oil companies who revise oil prices daily to keep it at par with global indicators. Also, the rupee has weakened to Rs 67 per U.S. dollar from Rs 66. The sanctions have been renewed on Iran at a time come when the supply is already down considering high demand and output restraint by the Organization of the Petroleum Exporting Countries (OPEC) for pushing petrol prices up. More taxes on petrol and diesel, more burden on the consumer.
Though the quantum of is still to be worked out, sources said it could be graded with Rs 2 per litre cut on petrol and diesel to be considered at first. The near Rs 83 per litre-mark here was last seen in September 2013.