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Gasoline and diesel prices in India hit a new record-high on Wednesday, adding another concern for the oil market about demand in the world’s third-largest oil importer.
India is reeling from a resurgence in COVID, with mobility already restricted locally because of the pandemic. Now the high fuel prices—too high for many households—also threaten to lead to further declines in India’s consumption of transportation fuels.
The price of the most used fuel in India, diesel, jumped on Wednesday, and so did the price of gasoline, for the seventh increase in prices so far in May, and the third day of price hikes this week alone.
Indian refiners, which had either reduced or frozen fuel prices between the end of March and the middle of April, resumed raising fuel prices after local elections in five states ended early this month.
Fuel prices vary from one state in India to another, depending on local value added taxes (VAT). The central government of India also receives money from fuel sales in the form of an excise duty on fuels for vehicles. All the taxes make up for 60 percent of the retail selling price of gasoline and more than 54 percent of the price of diesel, according to Indian Express.
Consumers in India are angry with the record-high fuel prices and shocked when they see how much the fuel costs now, local gas station employees told Sputnik.
Due to the COVID crisis, Indian fuel demand plunged by 9.4 percent in April compared to March, according to official data cited by Press Trust of India on Wednesday.
Oil demand in India is the main drag on the expected lower-than-previously-thought global oil demand this quarter, OPEC warned in its monthly report on Tuesday. The cartel, however, is optimistic that accelerating vaccination programs and rising fuel demand will raise global oil demand by 5.95 million barrel per day (bpd) this year despite the current COVID crisis in India, and kept its demand outlook unchanged from last month.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com