DNA Money Edit: A sharp rise in fuel prices looks imminent

Retail consumers of diesel and petrol may be in for a shock in next two weeks as oil marketing companies (OMCs) are likely to hike the prices and make up for past under-recoveries once the Lok Sabha elections are over. DNA Money on Monday reported that despite a spurt in international crude oil prices, the increase in retail prices of petrol has been nominal during the last one month as elections are underway. In 2019 so far, the price of the Indian crude basket has risen by almost 37%, thanks to the rise in global prices.

The basket for crude oil for India rose to $72 per barrel on May 2, from $52.43 per barrel on January 2. But the price of petrol only jumped around 6% during the four-month period. The market assumes that the retail price has not risen because the government did not want to risk public ire during the elections.

With the Trump administration forcing India to stop importing crude oil from Iran after it ended sanction waivers on countries importing oil from Tehran on May 2, India's average cost of imports has gone up substantially. There has also been a steady increase in India's dependence on crude imports over the last few years. In 2018-19, India imported 227 million tonnes (mt) of crude and paid $114 billion, up from 203 mt in 2015-16 for $66 billion.