All eyes on oil firms; will petrol prices be cut?

Indian Oil , Hindustan Petroleum and Bharat Petroleum had over the past one week indicated of a scope of reducing rates from June 1. The three firms, as per practice, were to revise rates of petrol on Thursday based on average international oil price and rupee-US dollar exchange rate in the previous fortnight.

With international gasoline rates, against which petrol is benchmarked, falling to USD 114-115 from USD 124 (that was taken into account for the steep Rs 7.54 a litre hike effected from May 24), there existed a scope for reducing prices by Rs 1.50-1.60 a litre.

"If they (oil companies) would have reduced rates today, the Opposition would have gone to town claiming that their Bharat Bhandh was successful which forced the government to cut prices," an industry official said.

Sources said the oil companies may take a call on Friday on the quantum of reduction considering that rupee has depreciated further against the US dollar - from Rs 53.17 to a dollar to Rs 55.30. Rupee depreciation raises cost of imports.

Every dollar fall in oil price should translates into a cut in product price by 33 paisa. But every time rupee depreciates against US dollar by Re one, it translates into a requirement to raise prices by 77 paisa.

Meanwhile, the DMDK will be holding protests in Tamil Nadu on Friday against the hike.

With Additional Inputs from PTI