Wondering why petrol prices are not being reduced despite the global crude oil prices falling to an 18-month low of around $90 a barrel? Blame the rupee for it. The Indian currency that depreciated to an all-time low of 57.30 against the US dollar, is playing the spoilsport.
For a country that imports almost 80% of its crude oil requirement and paid $140 billion (Rs. 770,000 crore) as the crude oil import bill during 2011-12, value of the rupee becomes very important.
State-owned oil companies agree that a cut of around Rs. 2.20-2.30 a litre was due in the backdrop of falling crude oil prices in the international oil market. However, with the rupee at a record low, most gains arising from a fall in crude oil prices have been washed away.
Oil companies are fully aware of the facts.
“They are watching the volatility and will take a decision very soon” petroleum minister S Jaipal Reddy said on Friday.
State-owned oil firms generally revise petrol rates on 1st and 16th of every month based on average imported cost and forex rates of the previous fortnight. However, they skipped changing rates on June 16 despite global crude oil prices having fallen to below $90 a barrel for the first time since December 2010.
“We are relieved that the price of crude oil have eased. But this has been upset by a decrease in the value of the rupee.”
Reddy said, “oil companies were watching the situation with keen interest and on a day-to-day basis.”
Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp will hold petrol price for a few more days and watch the developing situation, said sources.
“There is no revision in petrol rates in the next couple of days,” a source said.
Oil firms had last cut petrol rats by Rs. 2.02 a litre with effect from June 3 in a partial rollback of the steep Rs. 7.54 per litre hike effected last month. Petrol currently costs Rs. 70.24 a litre at IOC petrol pumps in Delhi.