Fuel prices may rise again soon as India's crude basket hits a 10-year high

Indians may feel the pinch of rising fuel prices once again as fresh hikes seem likely in the coming days. While Indian oil manufacturing companies (OMCs) have refrained from hiking fuel prices for 67 days, the increasing cost of India’s crude basket has made that position untenable for the long run. The basket hit a price of $121 per barrel on June 9 matching a decade-long record that was last seen in February/March 2012, according to data from the oil ministry's Petroleum Planning and Analysis Cell (PPAC).

International oil prices have once again risen above $115-levels since the last week of May as demand from countries surges while the continuing Russian invasion of Ukraine underpins supply fears. As India imports nearly 85 percent of its crude requirements, fuel prices are almost entirely dependent on international markets.

But despite the fact that the Centre decontrolled petrol and diesel prices a while back, OMCs have not hiked fuel prices since April 6. This has caused OMCs to lose between Rs 18-Rs 21 per litre on petrol and diesel.

Minister of Petroleum and Natural Gas Hardeep Singh Puri had said last week that the government was not dictating fuel prices to the OMCs and that the OMCs were responsible corporate citizens. Petrol costs Rs 96.72 a litre and diesel is priced at Rs 89.62 in Delhi currently.

With Goldman Sachs predicting earlier in the week that Brent futures will hit the $140 mark in July-September, it is likely that India will be seeing hikes from OMCs once again. Further increases in the price of petrol are only expected to worsen the inflationary pressures in India, where retail inflation is at an 8-year high of 7.8 percent already.