After state elections get over next week, price hikes in petrol and diesel are set to resume to close the Rs 9 a litre gap created by worldwide oil prices surging beyond USD 100 a barrel.
Fears that oil and gas supplies from energy powerhouse Russia could be disrupted, either by the conflict in Ukraine or retaliatory western sanctions, pushed international crude oil prices above USD 110 a barrel for the first time since mid-2014.
According to data from the oil ministry's Petroleum Planning and Analysis Cell (PPAC), the basket of crude oil India buys surged beyond USD 102 per barrel on March 1, reaching its highest level since August 2014. This compares to an average price of USD 81.5 per barrel for the Indian basket of crude oil when the price of gasoline and diesel was frozen in early November last year.
"We expect daily fuel price hikes to resume across both gasoline and diesel after state elections next week," JP Morgan stated in a research.
On February 7, the seventh and final phase of voting for the Uttar Pradesh legislative assembly will take place, with the results expected on March 10. Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL), all state-owned gasoline wholesalers, are losing Rs 5.7 per litre on petrol and diesel. This is before their customary margin of Rs 2.5 per litre is factored in.