The Indian crude oil basket has crossed the psychological $100 per barrel mark. The spike in prices comes as protests in Libya snowball and supply disruptions threaten to become more acute. Libya is one of the 10 richest oil producing countries.
Despite rising international prices, Oil Minister S Jaipal Reddy has ruled out any price hike, even for Petrol which is de-controlled. According to sources, oil companies are under pressure to avoid a petrol price hike and the periodic revision of petrol prices is on hold for now. Any hike in prices would contribute to rising inflation.
Petrol prices have been revised six times since deregulation in June last year. Sources say, the oil ministry is waiting for prices to settle down to manageable levels before taking a decision.
Consequently, oil marketing companies are reeling under cumulative losses to the tune of Rs. 450 crore per day due to the mismatch in prices across all fuel categories.
Oil retailers such as IOC, BPCL and HPCL are incurring a loss of Rs. 2.8 per litre on petrol prices, Rs. 11 per litre on diesel prices and Rs. 22 per litre on Kerosene prices. The loss on LPG is pegged at Rs. 360 per cylinder.
To tackle the difficult situation, the government might go for restructuring the oil duty in the budget according to sources. Currently, the custom duty on crude is 5 per cent while the duty on petrol and diesel is 7.5 per cent. The excise duty on petrol is Rs. 14.3 per litre and Rs. 4.65 on diesel. The government also charges Rs. 1 per litre cess on diesel and petrol.
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