Why petrol, diesel prices tend to soar higher? Buck stops at Russia-Ukraine war
Petrol and diesel prices have seen five hikes in the last six days, gradually mopping the benefits of the four and half months. With the latest price hike, per litre petrol and diesel prices in Delhi are currently standing at ₹99.11 and ₹90.42 respectively. In the last six days, the petrol rate has increased ₹3.70 per litre while diesel has become dearer by ₹3.75 per litre. However, the pricing of both these motor fuels is set to grow higher in smaller doses.
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Crude oil pricing has fluctuated between $97 and $139 per barrel since the war between Russia and Ukraine commenced. This has created a challenge for the Indian oil marketing companies to keep the pricing of petrol and diesel stable, as India imports 85 per cent of the total energy requirement. The Indian fuel price is heavily sensitive to the slightest fluctuations in the international market.
Petrol and diesel prices remained static since November last year after the central government announced a reduction in excise duty, followed by a VAT reduction by several state governments. On the other hand, since then crude oil prices went up by 25 per cent. This prompted the oil marketing companies to increase diesel prices for bulk users by ₹25 per litre.
With the war between Russia and Ukraine continuing for over a month now, and the shipping routes and supply of crude oil around the world being impacted due to the conflict, the oil price is expected to surge in the international market further. This will eventually result in a higher price for petrol and diesel in coming days.
It has been speculated several times that the government-owned oil market companies were restricting price hikes of petrol and diesel because of the assembly elections in different states across the country. Even that theory suggests that with the elections over, the oil marketing companies are likely to let loose the bar for price hikes, which they were holding for last four and half months.