Oil companies raise petrol price by Rs1.86 per litre in Delhi

Oil companies have raised petrol prices by Rs1.86 per litre in Delhi from today due to the worsening exchange rate and increasing international oil prices.

Oil companies are free to align petrol rates with market prices and the current hike is the fourth consecutive increase in petrol prices after it remained stable in May.

Commentatotrs say the government might be forced to hike diesel rates as well. 

The union cabinet had restricted oil companies from increasing diesel prices by over 50 paise per litre per month, but the cap may end up being waived as oil companies are losing over Rs9 per litre revenue on the fuel.

Since the cap had been set by the union cabinet, the petroleum ministry is likely to approach the cabinet at an appropriate time to revise or waive the cap.

According to executives of state oil companies, companies would be forced to raise petrol rates sharply even in future if the rupee continued to fall and global oil prices did not soften.

The largest oil marketing company, state-owned Indian oil Corporation said, "The movement of prices in international oil markets and INR-USD exchange rate is being closely monitored and developing trends of the market will be reflected in future price changes." IOC said in a statement.

According to forex dealers apasrt from dollar gains against other currencies overseas, the rupee has come under pressure from disappointing industrial production and a fall in exports, higher retail inflation data and a lower opening in the domestic equity market.

The rupee was up 11 paise to close at two-week high of 59.56 against the US dollar, Friday on fag-end sales of the US currency by exporters local equities rallied sharply. --------------