Petrol, diesel price hike unlikely to happen soon. Here's why

Commuters bracing for a major hike in petrol and diesel prices may breathe easy, at least for a while. As international oil prices fell below the $100 mark on Tuesday, the chances of any immediate fuel price hike seems unlikely. The Centre has assured that it is keeping a close watch on the ongoing Russia-Ukraine war and its fallout to make 'calibrated interventions' to keep petrol and diesel prices under control.

The fear of a massive petrol, diesel price hike became almost inevitable after Brent crude oil prices had touched a 14-year high of $139 per barrel last week. With no signs of any immediate ceasefire, the international oil prices had shot up since Russia invaded Ukraine. Later, when world's largest oil importer China reported resurgence of Covid-19, there were concerns about major impact on oil demand as well.

India, being the world's third largest importer of crude oil, braced for the impact of these fallouts. India relies heavily on oil imports to meet about 85 per cent of demand in domestic markets. Reports suggested a hike between ₹10 and ₹15 per litre on petrol and diesel. India's oil companies have been losing about ₹12-13 a litre, without considering marketing margin, on sale of petrol and diesel during this period.

Despite cost of raw material increasing by over 60 percent, Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) haven't changed petrol and diesel prices for a record 131 days. They were expected to revise prices after the assembly elections in five states ended earlier this month.

On Monday, Oil Minister Hardeep Singh Puri said, "Oil marketing companies will take their decisions (on fuel prices). They will proceed once they can no longer bear it. If they don't have the margin or cushion, they will take the appropriate step."

Minister of State for Finance Pankaj Chaudhary said, "Government is keeping a close watch on these factors and the evolving geopolitical developments and would make calibrated interventions as and when required to safeguard the interests of the common man."

The Centre had reduced excise duty on petrol and diesel back in November last year. The excise duty on petrol was cut by ₹5 per litre and by ₹10 on diesel to provide relief after prices touched an all-time high. Several state governments too had reduced VAT on fuel prices to provide further relief to consumers.