Petrol price races towards Rs 90 a litre in Mumbai

Motorists in the financial capital of the country should brace for the price of petrol to soon cross Rs 90 a litre. As of today, it is just 98 paise away from that mark, at Rs 89.02 a litre. From Saturday’s pricing of Rs 88.81 a litre, petrol became costlier by 21 paise on Sunday and maintains that pricing for today. Meanwhile, diesel at Rs 78.97 a litre is priced just Rs 10.05 lesser than petrol in Mumbai.

Fossil fuel prices have risen in eight of the past 10 days and it is unlikely that they may come down soon as oil marketing companies (OMCs) look to protect the automotive fuel marketing margins to ensure they maintain profitability. The past week has seen global crude oil prices firming up to US$ 44.48 a barrel; in April 2020, crude oil price had dived to a two-decade low of under $20 a barrel. 

According to a report by ICICI Securities, auto fuel net marketing margin has remained at comfortable levels of Rs 4.2 per litre in the current financial year (FY2021) till date. It has been Rs 3.34 per litre in Q3 FY2021  till date and Rs 3.59 a litre on November 25, 2020. However, a rise in global auto fuel prices would have meant net margins fall to Rs 1.05 per litre on December 1 and a negative (-) Rs 0.45 per litre on December 16. “Further price hikes are required and we are hopeful of the same to ensure net margins remain at Rs 2.0-2.5 a litre,” the brokerage said in its report.

If the OMCs continue to maintain marketing margins of over Rs 2 a litre, expect petrol and diesel prices to keep rising.

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Gains for Indian OMCs may be close to Rs 1,400 crore in Q3 FY2021