The spurt in international prices of crude has increased the possibility of domestic retail prices of diesel and petrol moving up sharply on April 1 when the administered pricing mechanism in the petroleum sector will stand dismantled and oil marketing companies will be free to set prices.
In case prices of crude continue to rule at the current level of $23.90 a barrel, retail prices of petrol are expected to go up by Rs 2.48 a litre and diesel prices by Rs 2.32 a litre.
While deciding on the new retail prices of petrol and diesel on February 28, the government had taken into consideration the international prices of Brent crude at $20 a barrel. It has been calculated by the Oil Coordination Committee that every $1-a-barrel increase in the international prices of Brent crude will result in the basic retail price of petrol going up by 32 paise a litre and the final price, after taking into consideration all the duties, moving up by 62 paise a litre. Since Brent crude is now ruling at almost $4 above the price of $20 a barrel, it is expected that in case crude prices continue to rule at this level till April 1, retail prices of petrol will move up by Rs 2.48 a litre.
Similarly, in the case of diesel, the Oil Coordination Committee has calculated that every $1-a-barrel increase in the prices of Brent crude above $20 a barrel will result in the basic retail prices of diesel moving up by 35 paise a litre and final prices by 58 paise a litre. This implies if the Brent prices remain around the current level of $23.90 a barrel till April 1, retail prices of diesel will move up by Rs 2.32 a litre.