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No deal at OPEC to hit fuel consumers badly in India

No deal at OPEC to hit fuel consumers badly in India

There may be no respite for fuel consumers in the country facing high prices of petrol and diesel for the past couple of months as global oil scenario is expected to remain firm with oil cartel OPEC failing to reach an agreement on gradual raising of oil production to meet the growing demand.

At a meeting of OPEC plus (including Russia) differences surfaced between world's largest oil producer Saudi Arabia and United Arab Emirates (UAE) over raising oil production marginally in August while maintaining production level at the same till 2022.

This prevented a deal that would have helped to soften crude prices a bit next month on the back of increased oil production of 2 million barrels a day.

With no deal among prime oil producers, analysts expect oil prices to remain firm and may hit even $80 a barrel over the next few days. At intercontinental exchange benchmark, Brent crude is currently hovering at $77.5 a barrel, up over 1 per cent from the previous day. This is the highest crude level since 2018. In fact, in the month of July itself crude prices have risen by over $7 a barrel.

"The situation in global oil markets is not good news for fuel consumers in India. Unless government intervenes by lowering taxes on the two fuels, petrol and diesel retail rates could touch new highs over successive days this month," said an oil sector expert not willing to be named.

Petrol and diesel prices have been raised on 35 days since May 1. This has increased retail petrol prices by Rs 9.46 a litre in the last two months while diesel has also increased by Rs 8.63 per litre during the same time span.

Also, the Centre had raised excise duty by Rs 13 on petrol and Rs 16 on diesel between March and May last year when oil prices collapsed due to the pandemic. The two hikes raised excise duty by 65 per cent on petrol from Rs 19.98 to Rs 32.98 a litre and 79 per cent on diesel from Rs 15.83 to Rs 28.35 a litre. These high taxes are amplifying the impact of rise in crude prices, sending petrol price above Rs 100 a litre and diesel above Rs 90 in most parts of the country.

With expectation that global oil may rise further in coming days, consumers would have to brace for buying fuel at new record prices everyday.