Fuel prices set to shoot up as OPEC+ extends output cut – Times of India

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NEW DELHI: The OPEC+ grouping of major oil-producing countries on Thursday extended the current production cuts to April, a move that is likely to send fuel prices hurtling towards new records, with petrol hitting Rs 100 per litre-mark in large parts of the country, unless taxes are reduced.
The decision dashed the government’s hope of higher production from next month, which would have eased upward pressure on pump prices and the need to cut taxes.
Hours before Thursday’s meeting of OPEC+ ministers, oil minister Dharmendra Pradhan had called upon OPEC to “fulfil its promise of price stability” by raising output. Last month, addressing the 11th IEA, IEF, OPEC symposium attended by Saudi oil minister Abdulaziz bin Salman Al Saud and OPEC secretary-general Mohammad Sanusi Barkindo, he had said artificial cuts to keep prices high would hurt demand recovery.
But agency reports suggest OPEC lynchpin Saudi Arabia and Russia, the other heavyweight in the expanded grouping, supported rolling over the production as members called for “cautious optimism”. The general view was that recovery in demand remained fragile as Covid-19 still cast a long shadow over demand.
Oil prices have risen to their highest in nearly a year to rule just below $65/barrel. In tandem, petrol price has topped Rs 100 per litre in several cities and hurtling towards this mark in others, including Mumbai where it cost Rs 97.57 on Thursday. Diesel was at Rs 88.60.
The high pump prices have stoked public anger and calls for tax cut by the Centre. Rajasthan, Assam, Meghalaya and West Bengal last month reduced state VAT between Rs 1 and Rs 7 per litre. But the Centre and other states have remained unmoved. Taxes currently account for over 60% of pump prices.
Instead, the Centre has shifted the blame on previous governments and OPEC+ production cuts. The Centre had raised excise duty on petrol cumulatively by Rs 13 per litre and diesel by Rs 16 in two tranches on March 16 and May 5 when crude prices collapsed as demand evaporated after Covid-19 shut down economies.
Fuel retailers adjusted the increased excise against higher margins resulting from cheaper crude and did not revise pump prices. But as states followed with higher VAT, retailers raised prices. Yet, consumers largely remained unaffected since only essential service vehicles were out on roads.



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