Fuel prices on March 12: Petrol, diesel prices in Mumbai, Delhi and other cities

It is feared that the Russia-Ukraine war will spill over into India’s retail fuel prices soon. (Representative Image)

Petrol and diesel prices were unchanged on March 12, remaining stagnant for over 125 days, 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.

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. While 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.

In Gurugram petrol is Rs 95.48 and diesel Rs 86.70 per litre; Noida petrol Rs 95.73 and diesel Rs 85.21 per litre; Jaipur petrol Rs 107.21 and diesel Rs 90.83 per litre; Lucknow petrol Rs 95.14 and diesel Rs 86.68 per litre; Patna petrol Rs 105.90 and diesel Rs 91.73 per litre.

States and UTs 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. Punjab, saw the biggest drop in petrol prices after it slashed VAT the most. The UT of Ladakh has seen the biggest drop in diesel rates.

States that did not lower VAT include Maharashtra, Jharkhand, Tamil Nadu, West Bengal, Kerala, Telangana and Andhra Pradesh.

Price hikes likely soon

Hostilities between Russia and Ukraine, along with sustained demand, is expected to keep global crude oil prices in the range of $95-to-$125 per barrel in the short term. At present, India imports 85 percent of its crude oil needs.

Consequently, experts think the geo-political crisis-led global hike in crude oil prices is expected to push India's domestic prices of petrol and diesel by Rs 15-22 per litre.

It is widely expected that the state OMCs will revise the current prices on or after March 7, which is the last day of voting in the ongoing state assembly elections. However, an excise duty cut may dampen the impact on petrol and diesel prices to an extent, but not entirely.

State OMCs facing losses

The hikes will look to bridge the Rs 9/litre gap created by international oil prices soaring past $100 a barrel from next week, experts felt. State-owned fuel retailers Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) are making a loss of Rs 5.7 a litre on petrol and diesel. This is without taking into account their normal margin of Rs 2.5 per litre.

JP Morgan in a report said for oil marketing companies (OMCs) need to increase retail prices by Rs 9 a litre or 10 percent next week to revert to normalised marketing margins. It added that prices will need to be increased by Rs 12 per litre by March 16 for fuel retailers to break even.

Closing prices

Benchmark United States crude oil for April delivery rose $3.31 to $109.33 a barrel on March 11. Brent crude for May delivery rose $3.34 to $112.67 a barrel.

Wholesale gasoline for April delivery rose 15 cents to $3.31 a gallon. April heating oil rose 12 cents to $3.42 a gallon. April natural gas rose 10 cents $4.73 per 1,000 cubic feet.

(With inputs from The Associated Press)