Petrol price goes up by Rs2.84 as global crude rises

State-run fuel retailers will raise the price of petrol by Rs2.84 per litre (in Mumbai) or around 4.5% from today, in response to rising crude oil prices in the international market.

Petrol is likely to cost around Rs63 per litre in Mumbai from Saturday midnight, according to company officials.

Coming as it does barely a month after a Rs3 per litre increase, and amid sky-rocketing food prices, this will put increased pressure on wallets as the country battles the highest inflation of any major Asian economy.

Sources at each of the three companies said Bharat Petroleum would raise the petrol price by Rs2.53 a litre, Hindustan Petroleum by Rs2.54, and Indian Oil by Rs2.50.

Petrol prices were deregulated by the government six months ago, allowing fuel retailers to set the prices. A similar decision to deregulate diesel prices was deferred by the government last month.

The oil companies have also increased aircraft fuel prices by 2% or around Rs 1 per litre. The hike is likely to have a 1-2% impact on air ticket rates.

The government had said that it will step in to freeze the right given to petroleum companies to increase prices as they wanted. The wholesale price index (WPI) rose an annual 8.43% in December, after a rise of 7.48% in November. Opposition parties — BJP and CPM — on Saturday slammed as “callous” and a “cruel blow” on the common man the Centre’s decision to raise petrol prices and demanded a rollback in the hike.

The BJP said the seventh hike in the last six months was totally unjustified and amounted to a loot of the common man and that it is the “worst gift” that a government can give to the people in the New Year.

Heading for $100 a barrel
Global oil futures were lifted by reports showing improvements in the US business sector. Industrial output showed larger-than-expected 0.8% expansion last month, according to the Federal Reserve.

An improving US economy is seen as stoking higher oil and fuel demand. Many analysts anticipate crude prices to hit $100 a barrel this year, largely on the back of a recovery in the developed world after strong demand from China and developing countries propped up oil prices in 2010.

“From an oil market perspective, we just continue to see increases in oil demand, and that’s not limited to just China,” said Andy Lipow, president of Lipow Oil Associates.