Fuel Rates To See Upward Revision From Next Week, Says JP Morgan

Amid record high crude rates with Brent gaining to $111 per barrel, the auto fuel prices in the country which have been static for quite some time, may begin their upward rally after state elections get over next week, said JP Morgan.

Fuel Rates To See Upward Revision From Next Week, Says JP Morgan

"We expect retail diesel and gasoline price hikes to restart from next week: With state elections getting over next week, we expect daily fuel price hikes to restart across both gasoline and diesel. Pump prices have been unchanged since November. We estimate that at spot Brent (~$105/bbl) and Diesel prices, the Oil Marketing Companies (OMCs) are losing Rs5.7/ltr v/s normalized margins of Rs2.5/ltr. We would caution investors that given the volatility in crude, diesel and forex, these numbers are dynamic and could change from day to day," JP Morgan said in a report.

Currently, petrol in Delhi is retailing at Rs. 95.41, while diesel costs Rs. 86.67 per litre.

On fears of supply disruption, crude internationally has soared past $110 per barrel levels-its multi year highs. As per the information from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry, the basket of crude oil India buys surged in price to more than $102 per barrel on March 1, 2022.
The brokerage said for oil marketing companies to revert to normalised marketing margins, retail prices need to increase by ₹9 a litre or 10 per cent. "We expect a combination of small excise duty cuts ( ₹1-3 per litre) and retail price hikes ( ₹5-8 a litre) to reflect the pass-through of USD 100 per barrel oil," it said.

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