Petrol and diesel prices were on Wednesday hiked by 80 paise a litre for the second straight day. Petrol in Delhi will now cost Rs 97.01 per litre while diesel rates have gone up to Rs 88.27 per litre, according to a price notification of state-owned fuel retailers.

In Mumbai, the petrol price has risen to Rs 111.67 per litre, and diesel to Rs 95.85 per litre. The rates, which differ from state to state depending on the incidence of local taxes such as VAT, are likely to continue to rise over the next few days as state oil firms recoup losses from keeping prices on hold for a record 137 days.

According to CRISIL Research, a hike of Rs 15-20 per litre is required to fully pass through a USD 30 per barrel increase in the cost of raw material (crude oil).

Petrol and diesel prices, which had been on a freeze since November 4, 2021, due to polls in five states, were hiked by 80 paise per litre on Tuesday.

Since June 2017, petrol prices are to be adjusted daily in line with the benchmark international rate in the preceding 15 days. But, rates have been on the freeze since November 4 last year just after the Modi government cut excise duty on petrol by Rs 5 per litre and on diesel by Rs 10 a litre to bring down rates from record-high levels. Most state governments too lowered local sales tax or VAT. Before these tax reductions, petrol price had touched an all-time high of Rs 110.04 a litre, and diesel priced at Rs 98.42 per litre. These rates corresponded to Brent soaring to a peak of US $86.40 per barrel on October 26, 2021. Brent was at US $82.74 on November 5, 2021, before it started to fall and touched US $68.87 a barrel in December.

International oil prices rose again this year and jumped to a 14-year high of US $140 per barrel in March. Brent was trading at US $118.59 per barrel on Tuesday. Also, the Indian rupee tumbled against the US dollar, making imports costlier.

India relies on overseas purchases to meet about 85 percent of its oil requirement, making it one of the most vulnerable in Asia to higher oil prices.

With inputs from PTI

First Published:Mar 23, 2022 6:28 AM IST