New Delhi, Sept. 11: The petroleum ministry is watching the current oil price situation but will agree on a hike in domestic prices of petro products if global prices continue on an upward path.
State run oil companies have asked the ministry informally to be allowed to hike oil prices this fortnight as global prices are firming up because of war fears in West Asia.
Though pricing decisions are supposed to be taken independently by oil firms after the sector was freed from various controls earlier this year, the government continues to take most of such decisions as the oil companies are still all state run.
Ministry officials said they had received pleas from the oil companies like Indian Oil Corporation, HPCL and BPCL but had refrained from agreeing to a price hike as crude prices were still fluctuating. “Crude futures dipped today after the US released data showing an increase in their winter stocks,” officials said.
“We expect things to stabilise but if they do not then a price rise will have to happen,” they added.
If the government agrees, oil companies are likely to hike prices by as much as Rs 2 a litre, unless the finance ministry agrees to cut customs duty marginally. “If that happens then the price increase will be to the tune of about Rs 1.25-1.50 a litre,” officials said. “We don’t want these jerky price hikes at a time when the economy is showing signs of recovery.”
Crude prices have gone up to recent highs of $ 29 a barrel in the wake of reports that the US was preparing to strike Iraq.
Oil companies hiked prices on August 31 by 22 paise a litre for petrol and 29 paise a litre for diesel based on a hike in global prices of about 3-8 per cent.