Fuel prices cut for first time in a year ahead of Assembly elections

Reduction, which comes ahead of Assembly elections, may not last as crude oil prices rise with Suez Canal blockage

State-run oil marketing companies (OMCs) cut fuel prices on Wednesday, the first reduction in over a year which comes weeks before five states go to the polls. Prices were last reduced on March 16, 2020.

OMCs cut the price of petrol by 18 paisa and diesel by 17 paisa on the back of lower Brent crude oil prices that have tumbled from $70 a barrel on March 11 to $60 a barrel on March 23.

The fall in crude oil prices is being attributed to the return of lockdowns in Europe that may result in a delayed demand recovery.

The retail prices of petrol and diesel had been kept stable for almost a month from February 23 in the national capital. OMCs had been holding back on price hikes after a ‘nudge’ from the Centre in light of the upcoming Assembly elections in West Bengal, Assam, Kerala, Tamil Nadu, and Puducherry.

Petrol price had been kept unchanged at Rs 91.17 a litre and diesel at Rs 81.47 a litre in New Delhi since March 1. This was despite benchmark international prices of these commodities climbing and Brent crude oil going up from $62 to $70 a barrel during this period. However, the price cut may not last. According to Bloomberg data, Brent was trading at $62.55 a barrel on Wednesday. The bounce-back in prices was caused by a giant container ship (Evergreen: pictured) losing control and blocking the critical Suez Canal.

Speculation is rife that Taiwan-owned MV Ever Given, a 400-metre-long and 59-metre-wide cargo vessel, may be stuck there for days.

This is pushing up crude prices across the globe, with West Texas Intermediate, the benchmark price for North America, trading 2.60 per cent up at $ 59.26 a barrel.

It is estimated that 10 per cent of global trade passes through the Suez Canal. The Egyptian authorities are said to have opened an older section of the canal to ease the blockade of ships on both sides of the critical water route.