India’s state-run oil marketing companies (OMCs) – Indian Oil, Bharat Petroleum, Oil India, and HPCL – were prompt in raising retail prices of petrol and diesel since early May this year to “match the rise in global crude rates”, they have been less than forthcoming to the softening of crude oil since mid-July.
The base price charged by the OMCs to the dealer, and hence, the retail motor fuel prices touched all-time high levels across the country on July 17 and have since remained at roughly the same levels. Pump price of petrol in Mumbai is over Rs 107 per litre while that in Bengaluru is Rs 106 plus per litre. Prices of petrol and diesel in Bhopal are at Rs 110.2 per litre and Rs 98.26 per litre respectively.
Global crude prices started to come down after the Opec+ group, in mid-July, agreed to increase crude oil output by 0.4 million barrels per day for the August-December period. Following the announcement, crude had suddenly corrected from the highs of $77 per barrel to $68 per barrel. Subsequently, after hovering around $71-75 per barrel for the rest of July, the Indian basket of crude has gradually come down to the level of $68.9 per barrel now.
The rise in crude prices in Q1FY22 was mainly supported by global demand recovery and voluntary production cuts until July-end from major oil exporting nations.
At present, the prices charged to dealers by OMCs are Rs 41.6 per litre for petrol and Rs 42.33 per litre for diesel. The Centre’s tax (basic excise, surcharge, agri-infra cess and road/infra cess) is currently Rs 31.80 per litre for diesel and Rs 32.90 per litre for petrol, while Delhi state VAT is Rs 23.50 per litre on petrol and Rs 13.14 per litre on diesel. In March and May 2020, surcharge and cess on auto fuels were cumulatively increased by Rs 13 per litre on petrol and Rs 16 per litre on diesel, leading to record-high auto fuel rates.