Petrol and diesel prices rise sharply as global oil climb continues

Diesel prices increased by a sharp 35 paisa per litre in the national capital to Rs 91.42 per litre on Wednesday while petrol prices rose by 30 paisa per litre to Rs 102.94 a litre, according to the Indian Oil Corporation, the country's largest fuel retailer.

Diesel prices have now increased on 10 out of the last 13 days taking up its retail price by Rs 2.80 per litre in Delhi. Its prices increased between 20-30 paisa per litre so far but on Wednesday, it breached this mark as well with the 35 paisa per litre rise.

With diesel price rising sharply, the fuel is now available at over Rs 100 a litre in several parts of Madhya Pradesh. This dubious distinction was earlier available to petrol that had crossed the Rs 100 a litre mark across the country a few months earlier.

Petrol prices had maintained stability since September 5 but oil companies finally raised its pump prices last week and this week, given a spurt in the product prices lately. Petrol prices have also risen on seven of the previous nine days, taking up its pump price by Rs 1.75 per litre.

OMCs had preferred to maintain their watch prices on global oil situation before making any revision in prices. This is why petrol prices were not revised for last three weeks. But the extreme volatility in global oil price movement has now pushed OMCs to effect the increase.

In Mumbai, the petrol price increased by over 30 paisa per litre to reach close to Rs 109 per litre while diesel rates increased and stood near Rs 100 a litre at over Rs 99.15 a litre.

Across the country, petrol and diesel increased between 30-40 paisa per litre but their retail rates varied depending on the level of local taxes in the state.

Fuel prices in the country have been hovering at record levels on account of 41 increases in retail rates since April this year. Prices fell on few occasions but largely remained constant.

After rising over three year high level of $80 a barrel earlier this week, the global benchmark came down to $78 a barrel and now is again up to $82 a barrel while OPEC+ has decided to stick to its marginal production easing plan and the market remains tight. 

Since September 5, when both petrol and diesel prices were revised, the price of petrol and diesel in the international market is higher by around $8-9 per barrel as compared to average prices during August.

Under the pricing formula adopted by oil companies, rates of petrol and diesel are to be reviewed and revised by them on a daily basis. The new prices becomes effective from morning at 6 a.m.

The daily review and revision of prices is based on the average price of benchmark fuel in the international market in the preceding 15-days, and foreign exchange rates.

But, the fluctuations in global oil prices have prevented OMCs from following this formula in totality and revisions are now being made with longer gaps. This has also prevented companies from increasing fuel prices whenever there is a mismatch between globally arrived and pump price of fuel.