New Delhi: Petrol and diesel price hikes are likely to resume after state elections get over next week to bridge the Rs 9 a litre gap created by international oil prices soaring past USD 100 a barrel.
International crude oil prices shot above USD 110 a barrel for the first time since mid-2014 on fears that oil and gas supplies from energy giant Russia could be disrupted, either by the conflict in Ukraine or retaliatory western sanctions.
The basket of crude oil India buys rose above USD 102 per barrel on March 1, the highest since August 2014, according to information from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry. This compares to an average of USD 81.5 per barrel price of the Indian basket of crude oil at the time of freezing of petrol and diesel prices in early November last year.
"With state elections getting over next week, we expect daily fuel price hikes to restart across both gasoline and diesel," JP Morgan said in a report.
The seventh and final phase of polling for the Uttar Pradesh legislative assembly is on February 7 and the counting of votes slated for March 10.
State-owned fuel retailers Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) are making a loss of Rs 5.70 a litre on petrol and diesel. This is without taking into account their normal margin of Rs 2.50 per litre.
The brokerage said for oil marketing companies to revert to normalised marketing margins, retail prices needed to increase by Rs 9 a litre or 10 per cent.