State-owned oil firms, which had last month hiked petrol price by a massive Rs7.54 a litre before partially rolling it back by Rs2 per litre, are likely to revise rates at the end of this month
New Delhi: Petrol price may be cut by as much as Rs4 a litre from 1 July 2012 as international oil prices fell to their lowest level since December 2010, reports PTI.
State-owned oil firms, which had last month hiked petrol price by a massive Rs7.54 a litre before partially rolling it back by Rs2 per litre, are likely to revise rates at the end of this month.
“Yes, there is a scope for reduction in petrol prices. But I will not stick my neck out and say there will be a reduction for sure as we have to watch for volatility in the rupee as well,” a top official at one of the three PSU oil retailers said.
State-owned fuel retailers, who as per practice revise rates of petrol on 1st and 16th of every month based on average imported cost and forex rates of the previous fortnight, had skipped changing rates on 16 June 2012.
Petrol at present costs Rs70.24 a litre at IOC petrol pumps in Delhi.
He said the last revision was done keeping in mind an average of $115.77 per barrel rate of gasoline, against which domestic petrol prices are benchmarked.
Gasoline rates have since fallen to about $97 a barrel. But the rupee has devalued to Rs57 to a dollar from Rs54.96 to a dollar (average of first fortnight of June 2012).
There was a scope to reduce petrol price by up to Rs4 per litre but with rupee falling further, the cost of imports has again risen, he said.
“There is a lot of volatility in oil prices as well as value of rupee. We are watching the situation very closely,” he said.
The official said the gasoline cracks or the difference between cost of raw material (crude oil) and the price of product (petrol) had narrowed to just $3 per barrel. In comparison, cracks for diesel were as high as $12-$13 a barrel.
With such narrow spread, any upward movement in crude oil price or devaluation of rupee would force an increase in price in near future, if the rates were to be cut now.
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