Petrolem prices set to rise by up to Rs6 per litre amid global oil surge

The prices of petroleum products are expected to increase by up to Rs6 per litre for the next fortnight of the ongoing month due to rising international oil prices. 

According to sources, the ex-depot petrol price could rise by Rs5-6 per litre, while diesel and kerosene prices may increase by Rs2-2.50 and Rs4 per litre, respectively.

This projected hike follows a recent surge in global oil markets, with Brent prices rising by $1-2 per barrel after US sanctions on Russian oil exports. These changes have pushed up the ex-refinery costs of petroleum products slightly over the last fortnight.

Currently, the ex-depot prices stand at Rs252.66 per litre for petrol, Rs258.34 per litre for diesel, and Rs162.95 for kerosene. This adjustment comes after the government increased petrol and diesel prices by 56 paisa and Rs2.96 per litre, respectively, on December 31.

The government imposes approximately Rs76 in taxes on each litre of petrol and diesel. This includes a petroleum development levy of Rs60 per litre and Rs16 per litre in customs duty, regardless of whether the fuel is locally produced or imported. Oil companies and dealers also charge around Rs17 per litre for distribution and sale margins.

Despite zero general sales tax (GST) on petroleum products, the combination of development levies, customs duties, and distribution margins continues to drive up fuel costs for consumers. 

Additionally, luxury fuels like high-octane blending components (HOBC) and 95RON petrol, used by high-end vehicles, are taxed at Rs50 per litre.

Petrol, used primarily in private transport and two-wheelers, impacts the budget of middle and lower-income groups. 

Diesel, a key fuel for heavy transport, trains, and agricultural equipment, is considered inflationary as it affects the cost of goods, including vegetables and other essentials.