Can petrol, diesel prices cool off soon?

Petrol price were increased by 23 paise per litre and diesel by 25 paise a litre on Tuesday. The hike – 13th this month – pushed petrol and diesel prices to record-high levels across the country, continues to make a deep cut in the common man’s pocket. Petrol already has breached the Rs 100 a litre mark in some parts of Rajasthan, Madhya Pradesh and Maharashtra.

Rising international crude oil prices and high taxes levied by the centre, state governments are key reasons behind the surge in fuel prices.

International crude oil prices rose recently but then cooled off from highs. The benchmark Brent oil is hovering near $68 a barrel, while the US West Texas Intermediate is trading around $65 a barrel.

The recent production cuts announced by OPEC and its allies coupled with the supply problem in the Gulf of Mexico pumped the crude oil prices higher. However, optimism over the return of Iranian crude supplies in the international market is cooling off the oil prices.

Analysts believe that crude prices are likely to remain in the range of $60 and $65 per barrel.

“Petrol and diesel are politically sensitive commodities due to which long term view is difficult to predict. The crude oil prices are likely to range between $60 and $65 per barrel on a sustained basis in the next 2-3 months. The cost to refiners will be the same as it is today or may go up by 2-4%,” said energy expert Narendra Taneja.

As per the reports, Iranian President Hassan Rouhani stated that the sanctions imposed by the US on Iran’s oil, banking and shipping sectors will be revoked. Bets on the return of Iranian oil supply might add to the global oil chain prices.

“Rupee has been appreciated in recent past and that will actually help to bring down the price. The rising trend in fuel prices in the country may halt in the short term. Also, in the long term crude prices can see a fall due to factors like an increase in electric vehicle consumption. So what we are seeing now is just a temporary phenomenon,” said T Gnanasekar, Director of Comm Trendz Research & Fund Management.

Additionally, according to Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking, paced vaccine distribution in many nations around the globe continues to underpin the demand outlook for the crude oil market.

“However, lower consumptions from major consumer India and inflation woes might remain a headwind for the oil prices in the days to come,” Mallya said.