New Delhi: Saudi Arabia's decision of increasing crude production that eventually lead to a bloodbath of sorts in commodities market at the start of the week may not bring down petrol and diesel rates significantly. The fall-out in discussion between OPEC and Russia lead many consumers to imagine of cheaper fuel in the immediate days to come.
Crude prices came crashing down after a meeting between Russia and OPEC (Organisation of Petroleum Exporting Countries) failed to materialize. Saudi decided to ramp up production and subsequently Russia hinted that it would act similarly. That hint was sufficient to lure oil traders into renting containers to stock oil.
Crude prices across a range of categories fell by thirty percent in a single session on Monday quoting figures of $31 per barrel for Brent Crude prices. Overall, the news was opportunity for several oil dependent countries despite market crash, Saudi Oil giant Aramco trading below its listing price, and Asia's richest man losing several millions from his net-worth.
The excitement around cheaper petrol and diesel could be visible at fuel outlets in metropolitan cities such as Mumbai that retails petrol at the costliest price across the country. Naturally, end consumers expect cheaper crude prices to instantly result into cheaper petrol, diesel, and even cooking gas cylinders. On Wednesday, Petrol in Delhi was sold at Rs 70.29 a litre while Diesel was selling at Rs 63.01 per litre.
It appears that petrol and diesel rates could turn cheaper only after a fortnight. An IANS story citing an unnamed official from IOCL said that family revision of petroleum product prices in India is based on 15 days trailing average price of products based on indices.
In the likelihood of lower-crude market trends persisting, petrol and diesel prices could be revised by at least Rs 5-6 per litre.
What is interesting is that, product prices in India follow the movement of Indian basket of crude, whose price remained relatively high at $45 a barrel on Tuesday. This movement would also have to be tracked before a larger benefit to consumers may accrue, said an oil sector analyst.
This analyst also added that a 4 per cent drop in rupee value against dollar this week had negated much of the gain of fall in oil prices as companies will now have to pay more to buy dollar and import oil.
Also, the possibility of government using the lower oil price to raise excise duty on petrol and diesel to boost its coffers is also there though official sources said that it could result in inflationary pressure and come as an other shock in the midst of a slowdown.
If state and and central government do not get tempted to raise duties on petroleum products, consumers could get a better deal in the last leg of the current financial year.
With inputs from IANS.