Fuel price hike likely as crude becomes costlier, blame it on Ukraine conflict

Petrol and diesel prices in India are likely to see a hike shortly, as the crude oil price in the international market has further increased owing to the ongoing Rusia-Ukraine conflict. The crude oil price in the international market has been increasing as the conflict between Russia and Ukraine is stoking supply chain concerns.

Brent crude on Tuesday advanced 0.9 per cent to $98.88, while US West Texas Intermediate increased 0.8 per cent to $96.5. Major oil and gas companies, including BP and Shell, have already announced plans to exit Russian operations and joint ventures. This would impact global oil production and supply. Reuters reports that the concerns over tightening supplies have been driving prices of crude oil higher. In this situation, the domestic price of petrol and diesel in India could see a hike as these fuel prices are closely related to the global crude price.

Petrol in Delhi currently costs ₹95.41 per litre while diesel in the city is priced at ₹86.67 per litre. In Mumbai, a litre of petrol and diesel cost ₹109.98 and ₹94.14, respectively. The prices remain unchanged since November last year when the central government announced a reduction in excise duty for both motor fuels. Subsequently, several state governments too announced reduction their respective VAT rates bringing in a much-awaited breather for the motorists and common people, who were reeling under pressure due to the record high price of both fuels.

However, with the increasing price of global crude oil, the difference between the domestic price of motor fuels and international crude is increasing fast, which would propel the oil marketing companies in India to announce a price hike. This would mop up the widening gap between international crude prices and domestic fuel prices.