Petrol price on Saturday breached the Rs 83 per litre-mark in Delhi for the first time in more than two years after a rally in international oil prices forced a 13th increase in rates in the last fortnight.
Petrol price on Saturday was raised by 27 paise per litre and diesel by 25 paise, according to a price notification of oil marketing companies.
Petrol price in Delhi rose to Rs 83.13 per litre from Rs 82.86. Diesel rates went up from Rs 73.07 to Rs 73.32 per litre.
This is the highest rate for petrol and diesel since September 2018 and followed the 13th increase in rates since November 20 when oil companies resumed daily price revision after nearly a two-month hiatus.
In 16 days, the petrol price has gone up by Rs 2.07 per litre and diesel rate has risen by Rs 2.86.
ICICI Securities said vaccine hopes are driving oil prices up.
Brent crude oil is up 34 per cent from lows in end-October 2020 driven by hope that COVID-19 vaccines would lead to demand recovery.
"The oil price surge is despite a second wave of Covid in Europe and US (which has led to demand recovery reversal), and surge in Libyan oil output from 0.1 million barrels per day (bpd) to 1.25 million bpd," it said.
Oil cartel OPEC plus its allies like Russia, (called OPEC+), deciding to raise output from January 2021 more modestly than earlier agreed is likely to ensure global supply deficit even in the first quarter of 2021.
"Thus, OPEC+ has done its part to prevent supply surplus until the vaccine boosts demand," it added.
Brent has risen from $36.9 per barrel on October 30 to $49.5 on December 4.
IEA estimates the global oil supply deficit at 2.1-2.8 million bpd in Q3-Q4 calendar year 2020. However, a surplus of 0.4 million was likely in Q1 2021 if OPEC+, as agreed in April 2020, was to prune output cuts from 7.7 million bpd to 5.8 million bpd from January.
"However, we now estimate supply deficit of 0.5 million bpd in Q1 2021 and 0.2-2.8 million bpd in Q2-Q4 as OPEC+ has decided to raise output by just 0.5 million bpd in January 2021 and by not more than 0.5 million bpd in later months and only after deliberations," ICICI Securities said.
Prior to the November 20 hike in rates in India, petrol prices had been static since September 22 and diesel rates hadn't changed since October 2.
Public sector oil marketing companies - Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) - revise rates of petrol and diesel daily based on benchmark international oil price and foreign exchange rate.
They had, however, resorted to calibrating the rates since the pandemic broke out with a view to avoiding volatility in retail prices.
The 58-day hiatus in petrol price revision and 48-day status quo on diesel rates were preceded by no change in rates between June 30 and August 15 and an 85-day status quo between March 17 and June 6.
In Mumbai, the petrol price on Friday was raised to Rs 89.78 per litre from Rs 89.52, while diesel rates went up from Rs 79.66 to Rs 79.93.
Rates vary from state to state depending on the incidence of local sales tax or VAT.
Photograph: Francis Mascarenhas/Reuters