Petrol-Diesel Price Hike Coming? Government Plans Gradual Rise in Fuel Rates as Crude crosses $105

Petrol and diesel prices are set to rise gradually as the government has drawn up a plan to increase fuel rates.

The Iran war could push crude oil prices higher and the government is already prepared for it. Here is what the plan looks like.

Source : ABP Live

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• OMCs face Rs 30,000 crore monthly loss on fuel sales.

The impacts of the rising tensions in West Asia are being felt across the world, pushing crude oil prices sharply high. As per reports, petrol and diesel prices in India may increase again. Surging crude prices are putting pressure on the government, oil-marketing companies (OMCs) and the country’s import bill. Government planning is underway to deal with this situation. 

Will Petrol-Diesel Prices Rise?

Petrol and diesel prices are expected to rise as crude oil prices climb due to the US-Iran conflict. Economists opine that with Brent crude crossing $105 per barrel, the pressure on oil companies, the government and India’s import bills is mounting rapidly. Speaking to India Today, experts highlighted that there is a very high possibility that petrol and diesel prices will rise after May 15. 

Petrol and diesel prices are expected to become costlier by Rs 4 to 5 per litre, while LPG cylinder prices could rise by Rs 40 to 50. Manoranjan Sharma said that oil-marketing companies (OMCs) are currently selling fuel below market rates, resulting in a loss of around Rs 30,000 crore every month. If crude oil prices remain elevated for a long period, absorbing this pressure will be difficult for the oil companies. 

India Imports Most of Its Oil

India imports more than 85% of its crude oil requirement. As a result, international oil prices and tensions in West Asia have a direct impact on the country. However, the government will likely prefer a gradual price increase over a sudden large hike, so inflation is not affected significantly at once. According to VK Vijaykumar, raising petrol, diesel, and cooking gas prices in a phased manner would be an easier and safer option for the government.