Petrol and diesel prices, which were expected to be hiked after the culmination of the multi-phase polling in Uttar Pradesh, remained stable on Tuesday. An imminent increase in fuel rates has been put on wait-and-watch mode for more clarity on international oil prices, according to a PTI report.

Polling in Uttar Pradesh ended on Monday.

On Tuesday, petrol costs Rs 95.41 per litre in Delhi and Rs 109.98 a litre in Mumbai. Diesel is priced at Rs 86.67 a litre in Delhi and Rs 94.14 per litre in Mumbai.

IOC, BPCL, HPCL TO TAKE A CALL

PSU fuel retailers Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) will watch the evolving situation internationally for a couple of more days before revising rates, PTI reported quoting three officials.

This decision follows marathon meetings company executives had with oil ministry officials late into Monday night.

“We are watching the situation closely. We need to see if the current spike in international oil prices is a temporary phenomenon or is it here to stay,” a senior executive with one of the three retailers said.

The situation, he said, will be watched for “a couple of more days” before arriving at any decision on price revision, the PTI report says.

INTERNATIONAL OIL PRICE

Fuel prices have been on a freeze for the past four months as five states, including politically significant Uttar Pradesh, went to the polls. This despite, oil rates swinging from USD 81.5 per barrel in early November to near USD 140 per barrel on Monday.

International benchmark Brent was trading at around USD 127 per barrel on Tuesday.

Officials said the government is worried about the impact of a price increase – both in terms of the general price rise as well as its political fallout.

“On paper, we have the freedom to decide the retail selling price of petrol and diesel. But it is also a fact that we have been incurring huge losses,” another official said, according to a PTI report.

PETROL, DIESEL PRICES ON A FREEZE

An industry source said the freeze on rate revision was ordered so that daily increases did not affect the electoral prospects of the ruling dispensation, PTI reported.

Since June 2017, fuel prices are to be adjusted daily in line with the benchmark international rate in the preceding 15 days. But rates have been on the freeze since November 4, 2021.

EXCISE DUTY CUT

The freeze came just as the central government cut excise duty on petrol by Rs 5 per litre and that on diesel by Rs 10 a litre, to bring down rates from record-high levels. Most state governments too lowered local sales tax or VAT.

Before these tax reductions, petrol price had touched an all-time high of Rs 110.04 a litre and diesel came for Rs 98.42. These rates corresponded to Brent soaring to a peak of USD 86.40 per barrel on October 26, 2021. Brent was USD 82.74 on November 5, 2021, before it started to fall and touched USD 68.87 a barrel in December.

WHY PETROL, DIESEL PRICES MAY GO UP?

• International oil prices started rising again this year and jumped to a 13-year high of USD 140 per barrel this week.
• To compound things, the Indian rupee tumbled to a record low of 77 to a dollar on Monday.
• India relies on overseas purchases to meet about 85 per cent of its oil requirement, making it one of the most vulnerable in Asia to higher oil prices.
• The twin blows of oil prices, already up more than 60 per cent this year, and a weakening rupee may hurt the nation’s finances, upend a nascent economic recovery and fire up inflation.
• Petrol and diesel prices need to be increased by Rs 15 a litre for fuel retailers to break even, industry sources said.
• The basket of crude oil that India buys rose above USD 126.36 per barrel on March 7, according to information from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry.
• This compares to an average of USD 81.5 per barrel price of the Indian basket of crude oil at the time of freezing of petrol and diesel prices four months back.

RUSSIA-UKRAINE WAR IMPACT

International oil prices have been on the boil ever since Russia put its forces on the Ukraine border last month. They spiked after it invaded the Central Asian nation on fears that oil and gas supplies from energy giant Russia could be disrupted, either by the conflict in Ukraine or retaliatory Western sanctions.

While Western sanctions have so far kept energy trade out, a prospect for a full embargo of Russian oil and products is leading to the latest rally in international oil prices.