New Delhi: The retail prices of petrol and diesel which has been raised by oil marketing companies effective today (May 15) might not be enough to address the under-recoveries in the two fuels, analysts have said. They also feel that should the blockade of the Strait of Hormuz continue, there could be more rounds of price hike to compensate for the higher price that companies such as Indian Oil Corporation, HPCL and BPCL have to pay for buying crude oil, thanks to the US-Iran war. Considering only the metro cities, petrol prices ranged from a high of Rs 108.74 in Kolkata to Rs 97.77 in Delhi. Diesel prices ranged from a high of Rs 95.25 in Chennai to Rs 90.67 in Delhi.
More price hikes expected
“There could be more such hikes in the weeks ahead in case the war in West Asia continues. We expect more policy measures from the government in this backdrop. The markets will remain range-bound with a positive bias amid intermittent bouts of selling,” Jyotivardhan Jaipuria, founder and MD at Valentis Advisors, a Mumbai-based SEBI-registered Portfolio Management Service firm, was quoted in the media as saying. The landed cost of crude in India has surged as much as 74.1% in rupee terms, thanks to the twin pressures of rise in crude oil price and decline in the value of the rupee. against the US dollar, in which crude oil has to be paid for.
Half-hearted measure
U R Bhat, co-founder & director, Alphaniti Fintech, a tech-led investment platform, also told the media that the Rs 3 a litre raise is inadequate to cover the loss that OMCs are incurring by selling each litre of petrol and diesel. He said that OMCs could raise prices once again if vessel movement remains restricted in the Strait of Hormuz as is happening now. “The quantum of hike suggests that it is a half-hearted measure by the government. They are likely to go for another round of fuel price hikes in case the stalemate continues in West Asia. That said, the government may give some time for everyone to absorb the latest round of hike,” he was quoted as saying.
It is clear that the government was trying its best to avoid any hike in petrol, diesel prices at all. That’s why it took 10 weeks to raise the price of the two essential fuels. The US-Iran war began on February 28, when the US bombed Teheran. The government had raised LPG prices — both domestic and commercial since the war — but refrained from hiking petrol and diesel prices. Crude oil is the most expensive item that India imports followed by gold. Therefofre, PM Modi urged Indians to curb the consumption of both fuels — by resorting to work fom home — and refraining from buying gold for a year.
