At least two of the three state-owned fuel retailers have denied receiving any instruction from the government to absorb increase in petrol and diesel prices which have touched record levels across the country.
This follows a media report today that the Oil Marketing Companies (OMCs) have been instructed by the government to absorb the increase in fuel prices and not pass it on to the consumers due to the upcoming state elections.
Sanjiv Singh, Chairman of Indian Oil Corporation (IOC), the nation’s largest fuel retailer, and M K Surana, Chairman and Managing Director of third-largest retailer Hindustan Petroleum Corp (HPCL) told media persons on the sidelines of the 16th International Energy Forum (IEF) here that no such instruction has been received by the companies.
Fuel prices in the national capital on Wednesday reached Rs 73.98 per litre- a high last seen in September 2013 and diesel prices stood at Rs 64.96, the highest the country has recorded so far.
Experts say the recent increase in global crude oil prices, gasoline prices and the marginal depreciation of the Rupee against the Dollar have contributed to the spurt in fuel prices in India. The rally has been supported also by the tensions in the Middle East, comments on OPEC-Russia extending voluntary production cut beyond 2018, trade war between US and China and the continued buoyancy in demand.
“While Brent prices breaching $70 per bbl is not ruled out in the next few months due to tight market conditions, the medium-term trend is bearish as there is significant scope for US shale oil producers to ramp up production,” said K Ravichandran, Senior Vice President at research and ratings agency ICRA.
He added oil production in US is at a record high and that nation’s oil export has also picked up. However, at higher oil prices, economics of electric vehicles and renewable energy sources will be better than oil derivatives, acting as a cap on runaway rise in oil prices.