Petrol and diesel price hikes turn marketing margin positive

Petrol and diesel prices have risen by a touch of quite Rs 2 per liter in four days. Turning net fuel marketing margin positive for oil companies. Petrol and diesel prices rose by 40 paise and 45 paise a litre, respectively, on Wednesday. Price hikes within the last four days totalled Rs 2.14 for petrol and Rs 2.23 for diesel. On Wednesday, the retail prices for petrol and diesel were Rs 73.40 and Rs 71.62 per litre in Delhi. In Mumbai, petrol was sold for Rs 80.40 and diesel for Rs 70.35 per litre.

“Net auto fuel marketing margins are back within the black at Rs 0.2/litre from minus Rs 1.28/litre on 6 Jun’20 thanks to retail price hike of Rs 1.74-1.78/litre within the last three days,” brokerage ICICI Securities said during a note on Tuesday. “While retail price hikes are encouraging, an extra price hike of Rs 5.5/litre (7-8%) is required if internet margin is to recover to Rs 1.19/litre on 1 July’20.” petroleum prices have doubled to $40 a barrel from its lows in late April, pushing up rates for petrol and diesel also.

State oil companies started hiking prices on Sunday after freezing it for weeks. In theory, oil companies need to revise the domestic prices of petrol and diesel daily. To align them with international rates. But in practice, they are doing not follow any specific pattern and lift, reduce or freeze prices in consultation with the govt. Private fuel retailers, which control almost a tenth of the market, follow state oil companies’ lead on pricing.

Oil Price Crash

Consumers have barely gained from the recent oil price crash as companies froze local fuel rates. Most of the gains from the worth collapse were appropriated as well as by the govt which raised duties on fuel. In two instalments, the central government raised duty by Rs 13 per litre on petrol and Rs 16 on diesel. Several state governments as well as too raised duties sharply on the fuel.

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