Mumbai: The union cabinet, which is meeting tomorrow, is expected to consider an increase in the retail prices of fuels in the wake of soaring crude prices.

"There is a possibility that the cabinet may discuss various measures, including fuel price hike, tomorrow," petroleum minister Murli Deora said.

Industry sources expect a price hike in the range of Rs2 to Rs5 per litre for diesel and petrol, respectively.
 
Deora has called a meeting of the heads of state-run oil marketing firms. The minister is also expected to call on prime minister Manmohan Singh.

Public sector oil marketing companies like Indian Oil corporation, Hindustan Petroleum and Bharat Petroleum have projected losses of around Rs200,000 crore on the sale of petrol, diesel, domestic LPG and kerosene below production cost.

Officials say the petroleum ministry is considering several options, including a price hike, to help state oil firms.

"We are discussing all possible measures to help and protect our PSUs. They would be bailed out, but I would like to assure the public that there is no need to panic," said one official.

Crude prices rose to over $135 a barrel today, following an unexpected drop in US crude and gasoline stocks.

US sweet light crude for July delivery rose to a high of $135.04 a barrel before easing to $134.87 in Asian morning trade.

The benchmark futures contract which closed $4.10 higher at a $133.17 on the New York mercantile exchange, is continuing its upward spiral.

London`s Brent crude for July delivery rose $1.75 to $134.45, above its previous intraday high of $133.34 set a day earlier.