Petrol will now cost Rs 71.14/litre in Delhi and diesel will cost Rs 59.02/litre taking into account additional impact of state taxes, Indian Oil Corp said in a statement. (Reuters)

India’s oil marketing companies raised petrol price by Rs 0.42/litre and diesel by Rs 1.03/litre, effective midnight, in line with rising global crude oil prices in trailing few weeks, sending shares higher on Monday amid flat broader markets.

Petrol will now cost Rs 71.14/litre in Delhi and diesel will cost Rs 59.02/litre taking into account additional impact of state taxes, Indian Oil Corp said in a statement.

Indian Oil Corp, the country’s largest oil marketer, was trading at Rs 335.3, up 1.36% from the previous close. Other two state-run oil marketing companies – Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd were also trading higher at Rs 490.7 (up 0.57%) and Rs 658.45 (0.12%) in the morning trade.

Benchmark indices marginally recovered from early morning weakness. BSE Sensex was trading at 27,257.16 points, up 0.07%, and NSE Nifty regained the 8,400-mark at 8,409.1 points, up 0.1%.

“The current level of international product prices of Petrol & Diesel and INR-USD exchange rate warrant increase in selling price of Petrol and Diesel, the impact of which is being passed on to the consumers with this price revision,” Indian Oil said in a statement.

“The movement of prices in the international oil market and INR-USD exchange rate shall continue to be monitored closely and developing trends of the market will be reflected in future price changes,” it added.

The three state-run oil marketing firms – Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp review retail fuel prices periodically, and usually revise them every fortnight to pass on the impact of global crude oil prices on their purchases.

This is the fourth straight increase in prices of petrol and third straight increase in prices of diesel India since November-December, when global crude oil prices started rising on the talk of world’s major oil producers contemplating a cut in output.

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OPEC (Organisation of Petroleum Exporting Companies) and other major oil producers of the world in November agreed to trim output to help balance the markets and provide a support to falling prices. OPEC, a group of 13 oil producing nations, decided on November 30 to cut global crude oil output by 1.2 million barrels per day. It was first such agreement between these producers since 2008.

Oil prices saw a continuous uptick since then, before falling again last week, as observers wait to see if the producers will follow through with the promised reduction in output. Brent crude for March settlement fell 56 cents a barrel and ended at $55.45 per barrel on the London-based ICE Futures Exchange.

Price of Indian basket of crude oil has risen to $53.95/bbl from $53.05/bbl for the preceding fortnight. However, strengthening Indian rupee against the US dollar provides cushion to Indian buyers from rising global crude oil prices.

The Indian basket of crude oil comprises sour grade (Oman & Dubai average) and sweet grade (Brent dated) of crude oil processed in Indian refineries in the ratio of 71.03:28.97.

Now that the global crude oil prices have inched above $55-mark, observers are waiting to see if the producers will continue to comply with the promised reduction.

“Compliance won’t be 100%, it never is,” Reuters said quoting an unidentified OPEC source. However, the source told Reuters that overall compliance rate of 50-60% would be good enough.

The cap on the recent rally in global crude oil prices may prompt Indian oil marketing companies to cut retail fuel prices in the following fortnights, provided current inventories stockpiled at higher prices do not weigh.