Diesel Prices Raised; Petrol Prices Unchanged For The 8th Straight Day

On Tuesday, diesel prices were raised by 23 to 25 paise across Indian cities while petrol prices were left unchanged for the eighth straight day by state-owned oil marketing companies.

On 7 July, diesel prices per litre were raised to Rs 80.78 in Delhi, Rs 79.05 in Mumbai, Rs 77.91 in Chennai, Rs 76.79 in Bengaluru and Rs 75.89 in Kolkata. On the other hand, petrol prices per litre were unchanged at Rs 80.43 in Delhi, Rs 87.19 in Mumbai, Rs 83.63 in Chennai, Rs 83.04 in Bengaluru and Rs 82.10 in Kolkata.

After three weeks of daily hike in fuel prices, the revision was paused for last week by oil marketing companies.

The resumption in upward revision comes after international oil prices gained on output cut by major producers. Brent crude, the benchmark for global oil prices, rose to $43.17 on Tuesday on a bigger-than-expected drawdown in US crude stockpiles reported last week and record supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) as well as its allies including Russia.

Meanwhile, Saudi Arabia's state oil producer Aramco has hiked official selling prices (OSPs) for its crude to Asia by $1 a barrel in August.

However, the surge in fuel prices seen in June was largely due to a hike in taxes by state and central governments to make up for economic losses due to the lockdown.

In Delhi, where diesel is now more expensive than petrol, the state government had increased VAT on both the fuels to 30 percent amid the coronavirus pandemic. For diesel, it was an increase from 16.75 percent earlier causing an increase of Rs 7.10 per litre, which is much higher than the impact on petrol that was imposed with a state VAT of 27 percent earlier, increasing its rate by Rs 1.67 a litre.

Additionally, the central government had increased the excise duty on per litre of petrol by Rs 10 and per litre of diesel by Rs 13.

Several state governments, apart from Delhi, have hiked their VAT or cess on fuel in May.

While diesel has been recording new highs since 19 June, petrol prices are also close to the all-time high rates last seen in October 2018 when international oil prices had spiked close to $80 per barrel. In October 2018, petrol price in Mumbai had crossed Rs 90-mark and in Delhi, it was around Rs 83 per litre.