The increase in prices comes in the backdrop of the demand for petroleum products picking up. IOC last week said its refineries are operating at full capacity
The price of domestic cooking gas for December has been raised following a spike in global energy prices. Effective 15 December, the price of a 14.2 kg non-subsidized Indane liquefied petroleum gas (LPG) cylinder in Delhi has been increased by ₹50 to ₹644.
Fuel retailers revise prices of LPG cylinders, which is primarily dependent on the international benchmark rate of LPG, and the US dollar and rupee exchange rate.
The cost of the Indian basket of crude, which comprises Oman, Dubai and Brent crude, averaged $56.43 and $69.88 per barrel in FY18 and FY19, respectively. It was $69.88 per barrel in FY20. The price fell, following the outbreak of the covid-19 pandemic, to $19.90 a barrel in April, $30.60 in May, $40.63 in June, $43.35 in July, $44.19 in August, and $41.35 a barrel in September, according to data from the Petroleum Planning and Analysis Cell. The price was $50.39 a barrel on 14 December.
This LPG price hike comes at a time when petrol prices in India are set to touch an all-time high. This has also added pressure on the government to cut taxes on fuel. The high prices come against the backdrop of the demand for petroleum products picking up. Indian Oil Corp. Ltd (IOC), India’s largest fuel retailer, said last week that its refineries are operating at 100% capacity.
The bounce back in international crude oil prices followed announcements of positive development about covid-19 vaccines. This volatile price situation has been exacerbated by an attack on an oil tanker docked at Jeddah in Saudi Arabia on Monday, which led to a blast and fire.
Rising energy prices will stoke inflation in India, the third-largest oil importer, even as the government tries to pull the economy out of a recession. Domestic refiners had slashed production during the lockdown, after demand for transportation fuel shrunk. There was, however, higher demand for domestic cooking gas.