Petrol and diesel prices may increase Rs 4 per litre in the coming days, say reports. As per industry experts, the sharp rise in fuel prices can occur if state-owned retailers return to pre-Karnataka election status when fuel prices did not show any change for a number of days. However, after elections in Karnataka had got over, oil companies including Indian Oil Corporation Ltd., Hindustan Petroleum Corporation Ltd. and Bharat Petroleum Corporation Ltd had increased the fuel prices. Following a reform, change in fuel prices is a daily routine, but, at least 19 days before Karnataka elections, there was no change in petrol, diesel prices.

Currently, petrol is being sold at Rs 75.32 per litre after it was increased by 69 paise earlier and 22 paise today. It’s the highest figure in almost five years. Meanwhile, Diesel prices also have gone up by 86 paise per litre, taking the current rate at Rs 66.79 per litre. According to Bloomberg, Kotak Institutional Equities in its report said, “Our computation suggests that downstream oil marketing companies are required to increase retail prices of diesel by a steep Rs 3.5-4 a litre and gasoline prices by Rs 4-4.55 per litre in the coming weeks to earn normative gross marketing margins of Rs 2.7 per litre.”

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It can be a result of keeping the fuel prices stable for more than a couple of weeks due to Karnataka elections, a sharp increase in global crude-product prices, has resulted in sharp moderation in gross marketing margins to around Rs 0.5-0.7 per litre. The increase is based on assumption that global price of diesel and petrol and Rupee-US Dollar exchange rate remain stable hereon.

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