New Delhi: With Brent crude prices continuing their upward trend and hitting $83.21 per barrel, fuel prices in India touched all-time highs on Monday, stoking fears of inflation before the Reserve Bank of India’s (RBI’s) monetary policy committee (MPC) meeting on Friday.

On Monday, petrol and diesel were selling at 91.08 per litre and 79.72 per litre, respectively, in Mumbai at state-run Indian Oil Corporation’s outlets. In Delhi, prices hit 83.73 and 75.09 per litre for petrol and diesel, respectively.

Also, subsidised domestic cooking gas prices have been increased by 2.89 per 14.2 kg cylinder to 502.40, an all-time high.

“There is a marginal increase of 2.89 per cylinder (from 499.51 in September 2018 to 502.40 in October 2018) in the effective price of a subsidised LPG cylinder in Delhi for domestic customers for the month of October 2018," Indian Oil Corporation said in a statement on Sunday.

Costly oil prices could also worsen the current account deficit, which widened to a four-quarter high at 2.4% of gross domestic product (GDP) in the April-June period from 1.9% in the January-March quarter of 2017-18.

Increasing tensions between the US and Venezuela, the US demanding an end to all imports of Iranian oil by early November, and the rupee’s performance as Asia’s worst performing currency of the year have compounded the situation and put India, the world’s third-largest oil importer, in a difficult spot. Of the 220.4 million metric tonnes (million MT) of crude oil imported by India in the year ended March 2018, about 9.4% was from Iran.

The cost of the Indian basket of crude rose to $81.27 a barrel on 28 September, according to the Petroleum Planning and Analysis Cell. To this, taxes at the central and state levels are added, besides dealers’ commission, to arrive at the retail price. The Indian basket represents the average of Oman, Dubai and Brent crude.

With US sanctions on Iran looming, Moody’s Investors Service has estimated an around $500 million decline in earnings for Indian state-owned refiners, IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), on account of substituting crude oil imports from the Persian Gulf country. Also traders worldwide are wondering if oil prices will cross the $100 mark yet again. International crude oil prices had reached a record high of $147 per barrel in July 2009.

State-run Oil and Natural Gas Corporation (ONGC) on its part expects crude oil prices to rise further. S&P Global Ratings said in a recent report that the agency expected Brent price to be at $70 for the rest of 2018, $65 in 2019 and $60 in 2020.

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