Petrol and diesel prices remained unchanged on February 26 for more than 110 days now, a notification issued by state-owned fuel retailers showed.
Prices have been frozen in the past but the current pause is the longest since daily fuel price revision was adopted in June 2017.
This comes as commodities surged to multi-month highs on supply risks amid the Russia-Ukraine conflict. Russia is one of the biggest crude oil producers along with the United States and Saudi Arabia — accounting for 10 percent of total global output and 30-40 percent of gas supply to Europe. Crude oil has surged to 2014 high, and European gas prices jumped to December 2021 high.
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Mukesh Kumar Surana, chairman and managing director of Hindustan Petroleum Corporation Ltd (HPCL), told Moneycontrol that crude oil prices may continue to rise after Russia’s attack on Ukraine, but factors like the Organization of Petroleum Exporting Countries (OPEC) potentially increasing output or a resolution of the US-Iran nuclear pact would also be crucial for the energy market.
He also spoke about why oil marketing companies have not increased prices of petrol and diesel despite the steep rise in crude oil, adding that prices will have to be aligned with global commodity prices if crude oil continues to rise.
"There is one possibility – that all this can bring the Iran-US settlement to a close quickly. Another thing to watch out for is whether Russia and Ukraine come to the negotiating table and the war situation subsides. In today’s environment, nobody can afford the long-term costs of war. So, the question is now how much time will it take for the tension to subside. Speculation activity built up prices in anticipation, but now what had to happen has happened. That’s why while crude prices are going up, intraday they also came down. For at least two or three days, we should see prices going up," Surana noted.
Domestically, the last rate cut was by Delhi when it reduced the local sales tax, or the value-added tax (VAT), on petrol from 30 to 19.4 percent from December 1 midnight, bringing down the price by around Rs 8 to Rs 95.41 a litre. Diesel price remains unchanged in the national capital at Rs 86.67 a litre.
On November 3, the Centre had gone for the deepest excise duty cut ever to cool retail prices from record highs, reducing the duty on petrol by Rs 5 and on diesel by Rs 10. Many states and Union Territories followed the Centre's lead to give further relief to consumers.
In Mumbai, a November 4 cut reduced the price of petrol to Rs 109.98 a litre, which remains unchanged. Diesel is at Rs 94.14 a litre.
In Kolkata, petrol and diesel prices remain at Rs 104.67 and Rs 89.79. Petrol is at Rs 101.40 and diesel at Rs 91.43 in Chennai.
The states and Union Territories that cut VAT after the Centre reduced excise duty include Ladakh, Jammu and Kashmir, Himachal Pradesh, Delhi, Sikkim, Mizoram, Daman and Diu, Karnataka and Puducherry.
States that have so far not lowered VAT include largely opposition ruled regions including Maharashtra, Jharkhand and Tamil Nadu. TMC-governed West Bengal, Left-ruled Kerala, TRS-led Telangana and YSR Congress-ruled Andhra Pradesh have also not cut VAT.
The Congress-ruled Punjab, which votes for the new assembly on February 20, has seen the biggest drop in petrol prices after it slashed VAT the most. The Union Territory of Ladakh has seen the biggest drop in diesel rates.
