Diesel has hit an all-time high and petrol is hovering around four-year peak in the country following a rapid rise in international rates led by strong global demand and oil producers’ resolve to keep crude supply restricted for extended period.
Higher prices are considered negative for heavy oil importers like India. Higher fuel prices trigger broader inflation, shrink room for rate cuts by the central bank, increase demand for foreign exchange, and leave the exchequer with lesser resources for development work as demand for subsidy and tax cuts rises.
A sharp recovery in crude oil prices, which is up 47% since July 1 last year, is estimated to have expanded India’s oil import bill to $88 billion in 2017-18 from $70 billion in the previous year. India imports nearly 82% of its oil requirement.
On Sunday, diesel was sold for record prices in all four metro cities of Delhi, Kolkata, Mumbai and Chennai. At Indian Oil outlets, diesel was priced at ₹64.58 a litre in Delhi and ₹68.77 a litre in Mumbai.
Petrol prices were highest since September 2013 in Delhi on Sunday. In Mumbai and Chennai, prices were highest since July 2014, and in Kolkata since August 2014. Petrol was sold for ₹73.73 a litre in Delhi, and ₹81.59 in Mumbai at Indian Oil pumps.