Explained: Factors That Determine Petrol & Diesel Prices in India

Explained: Factors That Determine Petrol & Diesel Prices in India

Petrol prices increased by Rs 0.31 per litre and touched Rs 79.15 per litre in Delhi.

Unleaded petrol will also go up, and will climb to its highest value in three months.

On the other hand, the duty on diesel increased by more than 4 times from Rs 3.56 per litre to a high of Rs 17.33 per litre.

"The prices of petrol and diesel are shooting up steeply and very soon, the price of petrol might touch Rs 100 per litre", said Andhra Pradesh chief minister N Chandrababu Naidu on Monday.

Expressing his views on Twitter, he wrote, "Petrol, diesel and gas prices are rising and are hitting all-time highs daily".

Meanwhile, Dharmendra Pradhan last week blamed the "isolated" policies of the U.S. for the "abnormally" rising fuel prices in the worldwide markets. The prices have breached the previous record-high reached on May 29. The US sanctions on Iran is not the only reason for India to be anxious about a possible spike in petrol and diesel prices.

This is according to economist Dawie Roodt, who stated that the energy department and economists use a set formula to calculate the fuel price on a monthly basis. "I would like to mention two points, and both these subjects are external".

Also, crude oil has gained United States dollars 7 a barrel in a fortnight, driven by fears that the U.S. sanctions on Iran will likely contract supplies. OPEC (Organisation of the Petroleum Exporting Countries) had promised that it will raise production by one million barrels per day, which was not raised.

There is no price increase for diesel or illuminating paraffin. Due to sanctions on Tehran from the US, India had to reduce its imports from Iran, subsequently reducing the total fuel availability in the country.

India imports about 80% of its crude oil, and the falling Indian rupee will make the imports costlier and lead to a rise in fuel prices. "Knowing that we can't disturb the fiscal deficit, we should rather be fiscally prudent", the official in the finance ministry said.

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