Petrol, diesel prices in India hit record high as crude oil prices increase; concerns on inflation

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A fuel pump in the Indian capital. Picute/IAC

Petrol prices in Delhi touched an all-time high of Rs 84.2 per litre after rising by 23 paise today. Earlier, the petrol price had touched an all-time high of Rs 84 on October 4, 2018, in Delhi. Diesel prices, today, were also raised by 26 paise a litre, taking the price to Rs 74.38 a litre.

While the petrol pieces are at a lifetime high in Delhi, diesel prices are at a record high in Mumbai at Rs 81.07. In Mumbai, petrol is being sold at Rs 90.83 a litre. The rise in fuel prices is another threat to the already high inflation in the country. 

Even as the retail fuel prices were not reduced when there was a sharp fall in the crude oil prices in the month of March 2020, the prices of petrol and diesel are on a rise as Brent crude prices are surging. Brent crude was trading above $54 a barrel, which is its highest level since last February.

The shot in crude prices is  after OPEC+ members agreed to maintain production levels around their current amounts for both February and March. Another reason for this rise in crude prices is that Saudi Arabia voluntarily cut output below its quota, while Russia and Kazakhstan were allowed to raise production. 

It is to be noted that the Brent crude prices had fallen below $20 per barrel in May 2020, which was less than half of the current level; however, the same did not reflect in the retail fuel prices in India. This is because the government at that time had raised excise duty by Rs 13 per litre on petrol and by Rs 15 a litre on diesel in two instalments in March 2020 and May 2020. The government’s move was aimed at garnering an additional revenue of Rs 1.6 lakh crore when the other sources of revenue generation were not performing well amid the lockdown.

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