Petrol cut by Re.1 a litre as crude prices dip

New Delhi: Petrol rates were cut Tuesday, effective midnight, by Re.1 a litre, excluding local taxes, following a decrease in international oil prices.

This reduction follows the one of 54 paise made on Oct 1.

After accounting for local sales tax, petrol per litre will cost in Rs.66.65 in Delhi, Rs.74.46 in Mumbai, Rs.74.21 in Kolkata and Rs.69.59 in Chennai.

"Since the last price change, international petrol prices have continued to show a downward trend. Despite INR-USD depreciation, the fall in international oil prices warrant a decrease in selling price of petrol in the domestic market," Indian Oil Corp said in a release here.

The international crude oil price of the Indian basket continued falling and went below $90 a barrel on the last trading day Friday.

"The price of the Indian basket was $88.23 per barrel on Oct 10. This was lower than the price of $90.50 per barrel on the previous day," the petroleum ministry said in a release Monday.

"Global benchmark Brent crude oil futures have fallen steadily for almost four months, dropping 23 percent from a June high of over $115 a barrel as fears of a Mideast supply disruption ebbed, US shale production boomed and demand from Europe and China showed signs of flagging," it added.

Earlier this month, the ministry said losses on diesel sales had been wiped out with the government now looking at a profit of nearly two rupees a litre on the fuel sales.

"The over-recovery on high speed diesel (HSD) applicable for the first fortnight of October effective Oct 1 is now Rs.1.90 per litre," an official release said.

This is possibly the first time that retail prices in India are higher than global rates.

While the government is keen to pass on the benefit of cheaper oil to consumers, it is hesitant to free diesel prices just before assembly elections, an official source told IANS.