Rs 12 hike in fuel prices needed to break even, says report

New Delhi, March 4

Petrol and diesel prices, which have been on a freeze for the past four months in view of assembly elections in states like Uttar Pradesh, need to be increased by over Rs 12 per litre by March 16 for fuel retailers to break even.

International crude oil prices shot above $120 a barrel for the first time in nine years on Thursday before retreating a little to $111 on Friday, but the gulf between cost and retail rates has only widened.

With international oil prices — on which domestic fuel retails are directly benchmarked — spiking in the last two months, state-owned fuel retailers “need a massive price hike of Rs 12.1 per litre on or before March 16, 2022, just to break-even and a price hike of Rs 15.1 is required” after including margins for oil firms, ICICI Securities said in a report.

The basket of crude oil India buys rose to $117.39 per barrel on March 3, the highest since 2012, according to information from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry. This compares to an average of $81.5 per barrel price of the Indian basket of crude oil at the time of freezing of petrol and diesel prices in early November last year.

“With state elections getting over next week, we expect daily fuel price hikes to restart across both gasoline and diesel,” JP Morgan said in a report.

The seventh and final phase of polling for the Uttar Pradesh legislative assembly is on March 7 and the counting of votes is slated for March 10. — PTI

Crude rises to $117/barrel

The basket of crude oil India buys rose to $117.39 per barrel on March 3, the highest since 2012. Fuel prices have been on a freeze for the past four months in view of assembly elections