Petrol, Diesel Prices Hiked By ₹3 Per Litre For First Time In Four Years; HPCL, BPCL, And IOC Shares Dip

The Centre has finally raised the retail prices of petrol and diesel by ₹3 per litre, with the hike taking effect from Friday, 15 May. This is the first revision of retail fuel prices in four years. Compressed Natural Gas (CNG) prices have also been bumped up by ₹2 per kg.

Petrol in Delhi will now cost ₹97.77 per litre, with diesel at ₹90.67 per litre. Both have gone up by ₹3 per litre. In Mumbai, petrol is priced at ₹106.68 and diesel at ₹93.14, while Chennai is selling petrol at ₹103.67 and diesel at ₹95.25 per litre.

Kolkata saw the sharpest jump among the four metros, with petrol now selling at ₹108.74 per litre and diesel at ₹95.13 per litre.

CNG in Delhi has been raised from ₹77.09 per kg to ₹79.09 per kg. A day earlier, CNG in the Mumbai Metropolitan Region was hiked by ₹2 per kg as well, taking the new price to ₹84 per kg.

Why The Hike Was Inevitable

Before this revision, the three state-run oil marketing companies (OMCs), that is, Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL), were collectively bleeding around ₹1,600 crore a day. They were buying crude at much higher international prices but holding back on passing the cost to consumers. The companies had even approached the government for relief.

The trigger for all this is the ongoing conflict in West Asia. The Indian crude basket, which was averaging $69 per barrel before the war broke out on February 28, has since climbed to $113-114 per barrel.

Brent crude is currently trading above $107, with WTI above $102. The closure of the Strait of Hormuz, which handles more than 20% of the world's daily oil and gas shipments, has only added to the disruption.

Shares of HPCL, BPCL, and IOC slipped up to 3% in early trade today, reacting to the change in prices.

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PM Modi’s Call

Prime Minister Narendra Modi has been urging citizens to cut down fuel use, push for public transport, carpooling, working from home, and faster adoption of electric vehicles. The Delhi government has even rolled out a 90-day public campaign and a two-day work-from-home schedule for government offices to back the move.

Oil Minister Hardeep Singh Puri recently flagged concerns over how long OMCs can keep absorbing losses, adding that the country needs to look at building up its strategic reserves further. India currently holds around 60 days of fuel stocks and 45 days of LPG inventories.

Sources:

NDTV

The Economic Times