Petrol, Diesel Prices Hit New All-Time High As Oil Climbs Past $60

On Tuesday, fuel prices continued to climb to new highs as international crude oil prices stage recovery to pre-covid levels and the Indian government provided no tax relief.

Rates were increased by 35 paise per litre by state-owned oil marketing companies to raise prices for petrol to Rs 87.30 in New Delhi, Rs 88.63 in Kolkata, Rs 93.83 in Mumbai and Rs 89.70 in Chennai. Diesel rates were hiked to Rs 77.48 in New Delhi, Rs 81.06 in Kolkata, Rs 84.36 in Mumbai and Rs 82.66 in Chennai.

These rates are revised every day primarily based on international oil prices and rupee's exchange rate.

In the international market, Brent crude futures, the global benchmark for oil prices, crossed the $60 a barrel mark for the first time on Monday in over a year due to tighten supply by major producers and an improved outlook on economic activity after the roll-out of COVID-19 vaccines.

Global stockpiles in onshore tanks and floating storage are estimated by the International Energy Agency to have shrunk by about 300 million barrels since OPEC (Organization of the Petroleum Exporting Countries) and its allies made deep production cuts in May 2020.

Recovery in global demand for crude oil was driven by China, wherein the number of tankers sailing toward the nation jumped to a six-month high on Friday. In India, another major market for oil exporting countries, demand is almost back to year-ago levels as consumption of cooking fuels and gasoline surged on the back of forced lifestyle changes due to the pandemic.

Meanwhile, the Indian government has not taken measures to reduce the excise duties hiked during the lockdown period, when international oil prices had crashed. Taking advantage of the low rates, the central government had increased the excise duty on petrol to Rs 32.98 per litre from Rs 19.98 and diesel to Rs 31.83 per litre from Rs 15.83, as a means to recover loss of revenue during lockdown. Similar hikes in taxes were also announced by state governments.

At present, taxes make for around 60% of the retail price of fuel in New Delhi.