State-oil retailing companies on Friday after a hiatus of almost 2 months have increased the retail selling price of both diesel and petrol. In the national capital, petrol is being sold for Rs. 81.23 per litre, an increase of 17 paise from the last price, while diesel quotes at Rs. 70.68, which marks an increase by 22 paise.
Further sources from the industry said that today's hike in fuel prices shall not be a one-off exercise and prices may be gradually increased over the next week as well. This is to prevent OMCs from incurring losses on the sale of auto fuel.
Since mid-2017, dynamic pricing model is being adhered to for petroleum products i.e. to say they no longer are governed by the administrative price regime. For both petrol and diesel, prices were revised on a daily basis at 6 am based on the international pricing.And holding the price revision for so long is quiet surprising.
Interestingly for every dollar increase in crude oil price, retail selling price of both diesel and petrol should go up by up to 40 paise per litre. This implies that in the current landscape auto fuel prices should be higher by as much as Rs. 1.2 per litre. Nonetheless, even when the trend required prices to be brought down, oil retailers continued with the same prices and now they cannot increase prices by a wider margin owing to the previous savings. So, once again regular fuel price revision shall become the norm.
The domestic price hike in auto fuel is on expected lines as global oil market has got a boost ever since pharma companies' have been reporting success in their experimental vaccines against Covid 19. Also, demand for oil as well as inventory levels which have gone down in major consuming nations has also led to the surge in global crude prices. The benchmark brent crude is moving around more than $44 per barrel while the US WTI is quoting at nearly $42 per barrel.