On Wednesday, fuel prices were raised for the eleventh consecutive day, gradually pushing higher towards levels last seen in 2018. Retail prices across Indian cities are now at 19-month high despite crude oil prices falling to multi-year lows.
Petrol price per litre was raised to Rs 77.28 in New Delhi, Rs 84.15 in Mumbai, Rs 80.86 in Chennai, Rs 80.22 in Hyderabad, Rs 79.79 in Bengaluru and Rs 79.08 in Kolkata.
Diesel price per litre was hiked to Rs 75.79 in New Delhi, Rs 74.32 in Mumbai, Rs 73.69 in Chennai, Rs 74.07 in Hyderabad, Rs 72.07 in Bengaluru and Rs 71.38 in Kolkata.
Since 7 June, after ending their 82-day hiatus in daily revision, state-owned oil marketing companies have increased petrol price by Rs 6 per litre and diesel prices by Rs 6.4 per litre.
These prices are close to levels last seen in October-November 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.
Comparatively, on Wednesday, Brent crude, the international benchmark for crude oil prices, was trading at $40.56 a barrel.
The present spike in fuel prices in India could be attributed to the fact that central and state governments, along with oil marketing companies are looking to make up for their loss in revenues due to the lockdown.
Last month, 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 have also hiked their VAT or cess on fuel in the last month. In fact, now around 70 percent of the retail price of fuel is just some form of tax.
Fuel demand in India has now recovered to 82-85 percent of pre-Covid levels. Meanwhile, the International Energy Agency (IEA) raised its 2020 global oil demand forecast to 91.7 million barrels per day (bpd).