Petrol Price Hike: A significant discussion is ongoing across the nation concerning the inclusion of ethanol in gasoline, which could potentially impact the public with surprises related to petrol and diesel costs in the near future. If the continuous surge in global crude oil prices persists, there might be a rise in petrol and diesel prices in India. A report on Moneycontrol suggests that should crude oil prices climb to $95-100 per barrel or beyond, there could be a need for oil companies and the government to reassess the pricing of petrol and diesel. Yet, as of now, the likelihood of a price hike seems minimal.
As per information from a Moneycontrol report citing sources, state-owned oil companies like Indian Oil, Bharat Petroleum, and Hindustan Petroleum could maintain operations at nearly break-even levels when crude oil prices hover around $85-90 per barrel. Hence, there seems to be no immediate urgency to raise petrol and diesel prices at their current levels. Notably, crude oil prices stood at approximately $95 per barrel on September 2nd and have escalated by over $4 in the last couple of days.
Similar circumstances were observed in May when petrol and diesel prices were increased by oil companies after a four-year period, with a hike of about ₹7.5 per liter. During that time, the Indian crude basket was priced at $106.23 per barrel due to prices exceeding $100 amid the US-Iran conflict.
Experts, such as Prashant Vashisht, Senior Vice President and Co-Group Head at ICRA, affirm that oil companies can achieve a break-even point on diesel produced at their refineries at crude oil prices ranging from $85-90 per barrel. Nevertheless, procuring diesel from independent refineries might lead to some losses. Currently, based on ICRA’s assessments, oil companies have a marketing margin of Rs 5 per liter on petrol sales, while diesel incurs a negative marketing margin of Rs 15 per liter.
Experts warn that if crude oil prices remain elevated for an extended period, oil companies might be compelled to increase retail fuel prices, as heightened crude oil prices could substantially amplify the companies’ losses.