New Delhi: On a downswing since the last two months, petrol and diesel prices could once again increase from next week onwards if the Organisation of the Petroleum Exporting Countries (OPEC) decides to cut supply and bring down crude oil prices in its meeting today. According to market analysts, a big cut in production is the most likely outcome of the Vienna meet despite pressure to lower prices further by US President Donald Trump.
In India, state-run oil retailers reduced fuel prices once again today. Petrol price is down by 40 paise while diesel by 43 paise. A litre of petrol costs ₹ 71.32 in Delhi, ₹ 76.90 in Mumbai, ₹ 73.99 in Chennai and ₹ 73.36 in Kolkata. Diesel, on the other hand, is priced at ₹ 65.96 in Delhi, ₹ 69.02 in Mumbai, ₹ 69.63 in Chennai and ₹ 67.79 in Kolkata.
After reaching a record high on of ₹ 84 on October 4 in Delhi, petrol is now at its lowest in this financial year. What also contributed to the slump is a cut of ₹ 1.5 in excise duty and a ₹ 2.5 cut in sales tax or VAT in several states. Besides, oil retailers were also asked to bear a loss of Re 1 on every litre of fuel sold in India.
Read: Petrol is now cheaper than diesel in these cities
It is now being speculated by oil distributors that after the assembly election results are out on December 11, the government may reverse the change in excise duty structure to boost the Centre’s revenue kitty as duties on fuel is a big tool to plug the fiscal deficit. Oil retailers are also likely to make up for their losses in a bearish market, as was indicated by the finance ministry earlier.
However if crude oil rates increases, this option may not be viable anymore for the finance ministry. According to a New York Times report, oil producers have little choice but to announce a substantial cut in production of at least 1 million barrels a day, or around 1 percent of world oil supplies. In the remote possibility of they not decreasing crude oil supply, prices could slide into the $40-a-barrel range or even lower.
Oil rates are already down by around 30% since October and benchmark Brent crude oil futures were trading around $61.49 per barrel today.