Petrol, diesel prices to be slashed by ₹3-5/litre around Diwali? Here's what brokerage says
₹3-5/litre around Diwali given key state elections start from November-December 2023. According to domestic brokerage firm JM Financials, this cut in fuel prices should mostly happen via reduction in excise duty or value-added tax (VAT), given the oil marketing companies (OMCs) lose out on auto-fuel marketing business at the current high crude prices.
Last week, the government cut the price of the domestic 14.2 kg LPG cylinder by ₹200/LPG cylinder for all 330mn domestic LPG consumers starting from August 30, in a bid to provide relief to the common man from the recent surge in inflation, said the brokerage. ‘’The burden of this LPG price cut will be borne by the government, however, this may increase OMCs’ working capital given the usual lag in government compensation,'' said JM Financials.
‘’Further, there is high expectation that government may also cut petrol/diesel price by INR 3-5/litre around Diwali given key state elections start from November-December 2023,'' added the brokerage. Oil producers Saudi Arabia and Russia extended their voluntary oil output cuts to the end of the year which resulted in a sharp surge in crude oil prices, with benchmarks Brent and US West Texas Intermediate (WTI) crude futures scoring 10-month high peak levels earlier this week.
Currently, Brent crude futures trades around 0.2 per cent lower to $90.41 a barrel, while US WTI futures is 0.2 per cent lower at $87.36 as uncertain outlook for demand from China overshadowed the tightening supply in markets. Back home, as a result of high crude rates trading around $90 per barrel levels, OMCs including Indian Oil, Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) may be forced to lift the freeze on petrol and diesel
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