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Business News/ Industry / Energy/  Petrol, diesel prices see no cut despite crude oil market crash. Here's why

NEW DELHI : If you have been expecting a big cut in petrol and diesel prices after US crude oil rates plunged below the $0 mark into negative territory for the first time in history and international benchmark Brent touched multi-year lows of $26 a barrel, then you could be in for some disappointment.

Barring a hike in few cities like Mumbai, Bengaluru and Kolkata due to an increase in VAT by some state governments, fuel retailers have not changed their selling price of both the fuels for more than a month now. Petrol and diesel prices were last reduced on March 16.

Brent oil prices, on which fuel price is based in India, have collapsed around 60% since the start of the year while the price of diesel has fallen only by 10% and that of petrol by 8.5% from their peak rate on January 11.

As the demand for petrol and diesel have fallen by over 60% due to curbs on travel and industrial activities during lockdown, oil marketing companies (OMCs) have been forced to reduce refining capacity and deal with inventory losses.

"Despite the sharp fall in crude prices, international refined product prices have also fallen sharply; with margins for gasoline and jet fuel at negative levels while diesel margins are at multi-year lows of under $6/bbl. Domestic margins are now better than international ones, hence the OMCs would strive to maintain prevailing price levels as long as possible," Refinitiv Oil Research's director Yan Chong Yaw told Livemint.

For most refiners, crude is purchased about 2 months in advance based on prices prevailing at the time. Petroleum ministry data shows the cost of Indian basket of crude was at $20.56 a barrel on 17 April.

"The steep fall in prices started from early March, so given the time lag, we would expect to see price falls only from May, if any," Yaw said.

The International Energy Agency (IEA) in its latest report said India's annual fuel consumption will decline 5.6% in 2020 compared with growth of 2.4% forecast in its March report. It estimates India's petrol demand will decline by 9%, while diesel will drop by 6.1%.

In Delhi, a litre of petrol is priced at 69.59 per litre and diesel at 62.29 per litre today. In Mumbai, petrol is selling at 76.31 per litre and diesel at 66.21 per litre. In Chennai, a litre of petrol will cost 72.28 per litre whereas diesel is now priced at 65.71 per litre.

In Bengaluru, petrol is now selling at 73.55 and diesel at 65.96. In Hyderabad, petrol pumps are charging 73.97 for petrol and 67.82 for diesel. If you are in Gurgaon, you will have to shell out 70.21 for petrol and 62.08 for diesel. In Kolkata, petrol pumps are charging 73.30 for petrol and 65.62 for diesel.

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Updated: 21 Apr 2020, 09:46 AM IST
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