The price of both petrol and diesel touched their highest level in more than a year on Monday as rates were increased for the ninth day in a row despite crude prices softening to multi-year lows.
While petrol price was hiked by 48 paise per litre, diesel price was increased by 59 paise as oil companies continue to adjust retail rates after ending an 82-day hiatus in revision.
Petrol price in Delhi was revised to Rs 76.26, up from 75.78 per litre the previous day, while diesel rates were increased to Rs 74.62 a litre from Rs 74.03, according to a price notification of state oil marketing companies.
Rates have been increased across the country and vary from state to state depending on the incidence of local sales tax or VAT.
These price levels were last seen in October-November 2018 when crude oil rates were at a record high. In India, the current spike in auto fuel rates can be attributed to the excise duty hike of ₹10 per litre on petrol and ₹13 per litre on diesel last month.
Besides, several state governments had also hiked VAT or cess on fuel but its impact was immediately passed on to customers.
This is the ninth daily increase in rates in a row since oil companies on June 7 restarted revising prices in line with costs, after ending an 82-day hiatus.
In nine hikes, petrol price has gone up by Rs 5 per litre and diesel by Rs 5.23 - a record increase in rates in any nine days since the daily price revision was introduced.
The freeze in rates was imposed in mid-March soon after the government hiked excise duty on petrol and diesel to shore up additional finances.
Oil PSUs Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL), instead of passing on the excise duty hikes to customers, adjusted them against the fall in the retail rates that was warranted because of international oil prices falling to two-decade lows.
International crude oil prices fell again on Monday as a spike in new coronavirus cases in the US raised concerns over a second wave of the Covid-19 disease which would weigh on the pace of fuel demand recovery. Brent crude futures - the global benchmark for crude oil - was seen trading down 1.7 per cent at $38.07 per barrel.
The government had first raised excise duty on petrol and diesel by Rs 3 per litre each on March 14 and then again on May 5 by a record Rs 10 per litre in case of petrol and Rs 13 on diesel. The two hikes gave the government Rs 2 lakh crore in additional tax revenues.
State-owned fuel retailers IOC, BPCL and HPCL had frozen petrol and diesel prices since March 16, as if anticipating the government move and set off gains they accrued from continuing drop in international oil prices against the excise duty hike.
They, however, promptly passed the increase in local sales tax or VAT by state governments such as Rs 1.67 increase in VAT on petrol and Rs 7.10 in diesel by the Delhi government on May 4.