Petrol prices inch towards the Rs 90 mark in Mumbai

• Since November 20, 2020 Indian Oil, Hindustan Petroleum and Bharat Petroleum have raised fuel prices multiple times
• Petrol price in Mumbai stands at Rs 88.98 a litre at some outlets
• Diesel prices are very close to the  Rs 79 a litre mark in the city

Motorists in the financial capital of the country should brace themselves  as the price of petrol will  soon cross Rs 90 a litre. As of today, it is just Rs 1.02 away from that mark, at Rs 88.98 a litre. From Saturday’s pricing of Rs 88.81 a litre, petrol became costlier by 21 paise on Sunday and maintains that pricing for today. Meanwhile, diesel at Rs 78.93 a litre is priced just Rs 10.05 lesser than petrol in Mumbai.

 Fossil fuel prices have risen in eight of the past 10 days and it is unlikely that they may come down soon as oil marketing companies (OMCs) look to protect the automotive fuel marketing margins to ensure they maintain profitability. The past week has seen global crude oil prices firming up to US$ 44.48 a barrel; in April 2020, crude oil prices had dived to a two-decade low of under $20 a barrel.

According to a report by ICICI Securities, the auto fuel net marketing margin has remained at comfortable levels of Rs 4.2 per litre in the current financial year (FY2021) till date. It has been Rs 3.34 per litre in Q3 FY2021 till date and Rs 3.59 a litre on November 25, 2020. However, a rise in global auto fuel prices would have meant net margins fall to Rs 1.05 per litre on December 1 and a negative (-) Rs 0.45 per litre on December 16. “Further price hikes are required and we are hopeful of the same to ensure net margins remain at Rs 2.0-2.5 a litre,” the brokerage said in its report.

If the OMCs continue to maintain marketing margins of over Rs 2 a litre, expect petrol and diesel prices to keep rising.