Diesel prices hit all-time high in New Delhi as crude oil prices remain high

The price of diesel in the national capital New Delhi touched an all-time high of Rs 59.38 per litre last week, according to data provided by Indian Oil Corporation (IOC), the country's largest fuel retailer.

Diesel prices in Kolkata and Chennai also hit their highest in almost three years against a backdrop of increasing crude oil prices, the Economic Times reported.

Fuel prices are being revised by oil marketing companies on a daily basis at the moment and are set at the average international price of fuel over the preceding 15 days with a lag of two days.

As a result, fuel prices across the country have been rising since the price of crude oil began its ascent in June, 2017. In fact in October, fuel prices in metro cities like Mumbai, Chennai, Kolkata and Delhi were at their highest in three years.

In order to soften the blow for consumers of fuel, the government was forced to cut basic excise duty on both diesel and petrol by Rs 2 per litre. The state governments of Gujarat and Maharashtra even cut value added tax on both fuels after the central government appealed to them to do so.

The rising price of fuel has also pushed up consumer inflation, which touched a 15-month high of 4.88 percent in November. At the time, fuel price inflation had hit 7.9 percent.

The price of crude oil is currently close to a two-year high as the Organization of Petroleum Exporting Countries (OPEC) has been deliberately producing a reduced amount of oil in order to address a supply glut that came up six months ago.

Other factors like disruptions due to hurricanes in the United States and Mexico, the pipeline blast in Libya, and increasing tensions in the Middle East and between US and North Korea have also contributed to inflating the price of oil.