NEW DELHI: Consumers in India are unlikely to be overburdened with high retail price of auto fuels - petrol and diesel - following a spike in international crude prices that rose 19 per cent on Monday.
Global oil prices are on the boil again in the aftermath of the largest ever-disruption in crude production post drone attacks in Saudi Aramco’s two of the largest oil processing facilities.
The attacks at Abqaiq and Khurais plants have sucked out 5.7 million barrels per production or Aramco’s 50 per cent oil output. This led global oil prices to increase 19 per cent to over $ 71 a barrel on Monday from a level of $ 60 earlier.
Sources said that with three states - Maharashtra, Jharkhand and Haryana going to the polls next month, the government does not want to risk higher auto fuel prices and face consumer outrage. Frequent increases in retail price of petrol and diesel is considered suicidal as an upshot in petroleum product prices could have an adverse fall out for the ruling BJP during the elections.
Therefore, it seems to have tempered its policy of market-determined retail pricing of petroleum products that were hitherto being revised on a daily basis based on international prices.
Sources said that state-owned oil marketing companies (OMCs) have been told by senior government functionaries to keep the daily price movement of the two petroleum products in check between now and the end of elections. This could be done by absorbing a portion of the price rise if the increase is consistent in view of global factors, especially disruption of supplies post drone attacks.
A recent report by Kotak said that in light of the sharp rise in international crude oil prices, Indian oil marketing companies (OMCs) may increase the retail price of diesel and gasoline by Rs 5 to Rs 6 per litre in the following fortnight. However, even if the disruption is long drawn, petrol and diesel retail prices may move up slowly minimizing the impact on consumers. OMCs moved similarly during the general elections in April-May this year when retail prices did not change on several days even though there was a need for an increase. (IANS)
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