Petrol prices may be cut further as oil dips below $96

Mangalore Today News Network

NEW DELHI, June 14, 2012: The price of crude oil purchased by Indian refiners has dipped to $95.75 a barrel- the lowest in more than a year--raising hopes of another cut in petrol prices and a substantial fall in oil subsidies if prices and the exchange rate stabilise at current levels, government and industry officials said.

Concerned by the widening gap between diesel and petrol rates, the government is considering hiking diesel prices by Rs 3 a litre, officials said. However, the meeting of the Empowered Group of Ministers, which can raise diesel prices, has not been called so far. Diesel is sold at Rs 40.91 a litre in Delhi, which is about Rs 30, or 74%, cheaper than petrol.

The petrol prices are expected to be reduced on or before June 16, officials said. The subdued international crude oil rates is expected to help oil firms reduce petrol prices by about Rs 3 a litre, which will reduce the price gap with diesel to some extent. This may put on hold the oil ministry’s demand to impose hefty levies on diesel cars, government officials said. Automobile manufacturers are fiercely opposing any proposal to impose additional duty on diesel vehicles.

A decline in international oil rates is expected to reduce revenue losses on diesel significantly below Rs 10 per litre from the level of Rs 12.53 per litre in the second half of May, when the average price of crude oil was $105.57 per barrel. "The average crude oil prices of Indian basket in this pricing cycle is expected around $98 per barrel, almost $7.5 barrel below the average of previous cycle," a state oil company official said.

State-run Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum have already reduced their combined annual estimated revuenue loss figure for 2012-13 by Rs 5,000 crore due to softening of international oil rates since May 23.

The three firms had initially projected a combined revenue loss of Rs 186,000 crore on selling diesel, kerosene and cooking gas below market rates. But they revised this figure to Rs 181,000 crore earlier this month. "This figure is expected to shrink further when the prices would be reviewed this week," an IOC official said.

Courtesy: Dailymail London