SG:Petrol prices may be cut further as oil price dips
The price of crude oil purchased by Indian refiners has dipped to USD 95.75 a barrel the lowest in more than a year raising hopes of another cut in petrol prices and a substantial fall in oil subsidies if prices and the exchange rate stabilise at current levels.
Government and industry officials said that concerned by the widening gap between diesel and petrol rates, the government is considering hiking diesel prices by INR 3 a litre. However, the meeting of the Empowered Group of Ministers, which can raise diesel prices, has not been called so far. Diesel is sold at INR 40.91 a litre in Delhi, which is about INR 30, or 74%, cheaper than petrol.
Official said that the petrol prices are expected to be reduced on or before June 16. The subdued international crude oil rates is expected to help oil firms reduce petrol prices by about INR 3 a litre, which will reduce the price gap with diesel to some extent. This may put on hold the oil ministry's demand to impose hefty levies on diesel cars, government officials said. Automobile manufacturers are fiercely opposing any proposal to impose additional duty on diesel vehicles.
A decline in international oil rates is expected to reduce revenue losses on diesel significantly below INR 10 per litre from the level of INR 12.53 per litre in the second half of May, when the average price of crude oil was USD 105.57 per barrel.
A state oil company official said that "The average crude oil prices of Indian basket in this pricing cycle is expected around USD 98 per barrel, almost USD 7.5 barrel below the average of previous cycle.ā€¯
