Petrol, Diesel Prices Set To Go Up As Russia Joins Opec To Reduce Production

Hyderabad: Owners of vehicles will have to shell out more bucks to buy petrol or diesel as oil marketing companies are planning to revise their prices sharply higher later this month in view of latest surge that propelled global oil prices to breach the psychological level at $50 per barrel on Friday.

Petrol and diesel prices vary from state to state depending upon the local sales tax. Petrol currently costs Rs. 64.72 a litre in Delhi and diesel Rs. 52.61 per litre. Global oil prices are now hovering over one-year highs as the Brent and WTI trading at $53 a barrel on growing expectations of an output cut by major oil producers.

Oil prices started picking up after the announcement by Russia that it was ready to join the Organization of Petroleum Exporting Countries (OPEC) in reducing crude output. Another oil producing nation Algeria has already called for similar commitments from other non-OPEC producers.

Oil prices started picking up after the announcement by Russia that it was ready to join the Organization of Petroleum Exporting Countries (OPEC) in reducing crude output. Another oil producing nation Algeria has already called for similar commitments from other non-OPEC producers.

OPEC provisionally came to an understanging in September to reduce the production level for the first time in eight years. Since then, global oil prices gained about 15 per cent.

The Indian crude basket, comprising 73 per cent sour grade Dubai and Oman crudes, with sweet grade UK Brent making up the rest, breached the psychological level at $50 per barrel on Friday.

Petrol and diesel prices are deregulated in India, which means they are linked to market rates.

Normally, state-owned fuel retailers Indian Oil Corp (IOC), Bharat Petroleum Corp and Hindustan Petroleum Corp revise rates of the fuel on a fortnightly basis based on the average oil price and foreign exchange rate in the preceding fortnight.

The Organization of the Petroleum Exporting Countries aims to agree on cutting about 700,000 barrels per day (bpd), bringing its output to 32.5-33.0 million bpd by the time it meets in Vienna for its policy meeting on November 30. It will be OPEC’s first output reduction in eight years and comes two years after prices crashed from highs above $100 a barrel.

India imports more than three-fourth of its crude oil requirements. So apart from global oil prices, the value of the rupee as well as the margins of oil marketing companies and the various government levies determine the final price of petrol and diesel price in India.

The Organization of the Petroleum Exporting Countries aims to agree on cutting about 700,000 barrels per day (bpd), bringing its output to 32.5-33.0 million bpd by the time it meets in Vienna for its policy meeting on November 30. It will be OPEC's first output reduction in eight years and comes two years after prices crashed from highs above $100 a barrel.

Global oil prices have been very volatile this year. They had dropped to 12-year-lows of below $30 per barrel in February before currently hovering around over one-year high levels of $53.

With Inputs from Agencies