Petrol, diesel prices hiked; more to come as crude nears $80/barrel

New Delhi: Petrol price on Tuesday was hiked by 20 paise per litre and diesel by 25 paise as international oil prices neared $80 per barrel mark for the first time in three years.

The price of petrol was hiked to Rs 101.39 a litre in Delhi from Rs 101.19 and to Rs 107.47 per litre in Mumbai, according to a price notification of state-owned fuel retailers.

Diesel rates went to Rs 89.57 a litre in Delhi and Rs 97.21 in Mumbai.

Prices differ from state to state depending on the incidence of local taxes.

This is the first price increase in petrol in more than two months and the fourth in case of diesel.

The increase followed international oil prices rising for the fifth consecutive day and global benchmark Brent heading for $80 per barrel.

Tuesday was the first increase in petrol price since state-owned Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) on September 24 resumed daily price revisions, ending the pause in rates that had effected since September 5.

In four price increases since September 24, diesel rates have gone up by 95 paise per litre. This negates three-fourths of the Rs 1.25 a litre cut in prices that happened between July 18 and September 5.

Before this, diesel price was last increased on July 15. The last increase in petrol rate was on July 17.

International crude oil prices have reached a nearly three-year high as global output disruptions have forced energy companies to draw more crude oil out of their stockpiles.

Accordingly, US crude oil inventory levels are also nearing a three-year low.

"Global demand for crude oil has been increasing consistently with the easing of pandemic restrictions and improving vaccination rates. On the supply side, OPEC+ alliance has been slow in easing output restrictions, contributing to the tightened supply in the market," a source said.

Additionally, hurricanes Ida and Nicholas have impacted crude oil production in the US Gulf of Mexico region, when they hit in late August and September, respectively.

As per both IEA and OPEC, global demand is expected to outpace supply due to which international oil prices will likely remain firm in the near to mid-term. A simultaneous rally in natural gas is also likely to drive demand for alternate fuels.

When international oil rates fell in July and August, retail prices of petrol and diesel in the Delhi market were reduced by Rs 0.65 and Rs 1.25 per litre.

Prior to that, the petrol price was increased by Rs 11.44 a litre between May 4 and July 17. Diesel rate had gone up by Rs 9.14 during this period.

The price hike during this period pushed petrol prices above the Rs 100-a-litre mark in more than half of the country, while diesel crossed that level in at least three states.

India is dependent on imports to meet nearly 85 per cent of its oil needs and so benchmarks local fuel rates to international oil prices.