Fuel prices rise again: Petrol, diesel hiked by 90 paise in second hike in a week | Today’s news
India’s oil marketing companies (OMCs) hiked fuel prices for the second time in a week, raising petrol and diesel prices by around 90 paise per liter on Tuesday. Followed by a ₹3 per liter for a hike on May 15.
Petrol rose by 87 paise in the national capital, according to data from Indian Oil Corp Ltd ₹98.64 per litre, while diesel climbed to 91 paise ₹91.58. Other major metros saw similar increases:
- Mumbai: Petrol hiked by 91 paise ₹107.59; diesel rose by 94 paise to ₹94.08.
- Kolkata: Petrol rose by 96 paise per ₹109.70; diesel rose by 94 paise to ₹96.07.
- Chennai: Petrol rose by 82 paise per ₹104.49; diesel rose by 86 paise to ₹96.11.
Artificially suppressed
Rising prices have been on the anvil for some time, with retail rates holding steady since the outbreak of the Iran war, even as oil prices hit a multi-year high of $126 a barrel on April 25. The subsequent Iranian blockade of the Strait of Hormuz and the US naval blockade of Iran choked global oil supplies, leading to energy shortages in several countries. In normal times, the Strait of Hormuz accounts for 20% of global oil and gas trade.
Oil prices fell slightly on Tuesday after US President Donald Trump announced on Monday that the US would delay a planned military strike against Iran.
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At around 17:40 IST, the July Brent contract was trading at $110.96 per barrel on the Intercontinental Exchange, down 1.01% from the previous close, while the June West Texas Intermediate contract was down 0.46% at $103.87 per barrel on the NYMEX. Both pared losses after falling 2% in the morning session (India time).
On Monday, Trump said he had postponed plans for a “planned attack on Iran” at the request of the leaders of Qatar, Saudi Arabia and the United Arab Emirates. Concerns about supplies were also eased by the extension of exemptions from US sanctions on the import of Russian oil. However, concerns remain about the prospects for a US-Iran peace deal that will keep oil prices high.
Stocking Inflation
State-owned oil firms pared their combined daily losses after Friday’s price hike ₹1,000 million crowns ₹750 crore, Sujata Sharma, joint secretary in the petroleum ministry, said on Monday. These losses, borne mainly by public sector fuel retailers, have risen sharply in recent months due to increased oil prices and the mismatch between international fuel costs and domestic retail prices.
But while India’s fuel price hike will help oil marketing companies recover from revenue losses, the resulting inflationary pressure is likely to weigh on economic growth estimates.
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Pronob Sen, India’s former chief statistician, said: “These increases in the prices of petroleum products will obviously lead to an increase in inflation as it would have cross-sectoral effects.”
“The price increase is not only due to financial pressure. Along with the financial problem, there is also an availability problem. If you want people to consume less, one way is to increase prices or resort to rationing. In the case of LPG, we have seen some rationing,” he added.
Data released by the Department of Industrial Promotion and Internal Trade (DPIIT) last week showed that India’s wholesale inflation rose to a 42-month high of 8.3% in April from 3.88% in March, driven by a sharp rise in prices of fuel, oil and industrial products.
Fuel and energy inflation jumped to 24.71% in April from 1.05% in March, becoming the largest contributor to overall wholesale inflation.
Retail inflation hit a 13-month high of 3.48% in April as prices for food and drink, clothing, housing and utilities firmed on rising energy prices. Higher petrol and diesel prices are expected to increase it further.
India imports about 90% of its oil, and an annual increase in oil prices of $1 per barrel increases the country’s annual import bill by about ₹18,000 crore, according to Bank of Baroda’s latest estimates. India’s oil import bill stood at $26,123.11 billion in the fiscal year, according to preliminary data from the Petroleum Planning and Analysis Cell.
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