Even as global crude oil prices are on the rally this week, oil marketing companies in India revised the price of fuel higher only on Thursday after a respite for four continuous days. This is owing to the pressure from the government as it does not intend to hit the sentiment of common men during the crucial election season.
And in its wake, a report by rating agency Fitch says that the fuel is set to get pricier as fuel retailers are expected to make up for the losses in the medium term.
Global crude oil prices surged past $75 per barrel level on Thursday for the first time in 2019. And as per experts crude hitting $80 per barrel mark will put further pressure on the OMCs.
Another deterrent for these oil retailers is the government's push to provide higher returns to shareholders. The oil marketing companies (OMCs) IOC, Bharat Petroleum Corporation Ltd (BPCL) and upstream entity Oil India Ltd (OIL) declared high interim dividend of 67.5 per cent to 110 percent of the face value of their shares, and undertook share buybacks in the financial year ended March 31, 2019", Fitch said.
Nonetheless, no major impact on the financials of OMCs is foreseen by the rating agency due to fuel price controls. So, as fuel retailers are expected to recoup losses in the coming time, fuel price revision will be effected on a daily basis, reflecting market prices.
On Friday, petrol prices have unmoved, while diesel prices have been revised higher by up to 8 paise across the major cities in the country.