Fuel prices in all metro cities are once again at an all-time high. A litre of petrol costs maximum in Mumbai where it is available at Rs 86.56. The price of petrol in Delhi today is Rs 79.15, in Kolkata Rs 82.06, and in Chennai Rs 82.24. Petrol price had previously hit its highest level five months ago on May 29.
Diesel is being sold at Rs 71.15 in Delhi, Rs 74 in Kolkata, Rs 75.54 in Mumbai and Rs 75.19 in Chennai. Fuel prices have been on the rise since August 16 after the rupee dipped to its lowest value against the US dollar.
Union Petroleum and Natural Gas Minister Dharmendra Pradhan yesterday blamed 'external factors' for the rise in domestic prices of petrol and diesel, but said that the hike was temporary. He also said that the factors responsible for drop in production of crude oil have caused a spike in fuel prices in India.
Explaining the causes behind the recent hike in fuel prices, the Minister said: "I would like to mention two points, and both these subjects are external. OPEC (Organisation of the Petroleum Exporting Countries) had promised that it will raise production by one million barrels per day, which was not raised. Apart from that, crises in countries like Venezuela and Iran are increasing. There is a pressure on oil prices due to decrease in production. Secondly, global currencies have weakened against the US dollar."
Iran, which is the second biggest oil exporter to India and the third-largest oil producer in the OPEC Group, is likely to plunge into crisis once the United States' sanctions come into effect on November 1. The US sanctions on Iran is not the only reason for India to be worried about a possible spike in petrol and diesel prices. Saudi Arabia, which is world's second largest oil producer, too is contributing to keep the prices on an upward trend. It has started cutting production just a month after agreeing to increase the output. In July, it cut its oil production by an average of 200,000 barrels per day - a move that has created oil shortage in global market.
Pradhan said that the government was planning to put diplomatic pressure. "A high-level American delegation is visiting India, and India's two senior representatives - defence minister and external affairs minister - will talk to them. All these factors will be discussed. I consider this period (of high petrol, diesel prices) temporary," he said while referring to the 2+2 dialogue between the two countries scheduled later this week in Delhi.
Earlier, France-based BNP Paribas had said that because of the US sanctions on Iran, oil production from the OPEC would come down from an average of 32.1 million barrels per day in 2018 to 31.7 million in 2019. This year in May, Bank of America Merrill Lynch observed that the deteriorating conditions in Iran may push the crude oil prices to USD 100.
Petroleum prices, which are determined by the cost of crude oil in global markets, may continue to go up as the international markets are under pressure due the US sanctions on Iran and Saudi Arabia's decision to cut oil production.