NEW DELHI: Petrol and diesel prices were today cut by Rs 2 per litre each as international oil prices slumped to five-year low.

This is the eighth straight reduction in petrol prices since August, and fourth in diesel since October. New rates will be effective midnight tonight, Indian Oil Corp , the nation's largest fuel retailer, announced here.

In Delhi, petrol will cost Rs 61.33 a litre, the lowest in 44 months, as compared to current price of Rs 63.33. The price has been cut by Rs 2.09 a litre in Mumbai to Rs 68.86.

Rates differ from state to state because of varied rates of local sales tax or VAT.

Diesel will cost Rs 50.51 a litre in Delhi, the lowest since July 2013, as against Rs 52.51 currently. In Mumbai, it will cost Rs 57.91 per litre as compared to Rs 60.11.

The rate cut would have been steeper but for the government deciding to make hay out of the crude oil rate slump to $62.37 per barrel by raising excise duty on petrol by Rs 2.25 and by Re 1 a litre on diesel.

Crude oil price in June was $115 per barrel. The prices of petrol and diesel were last revised downwards on December 1 by 91 paisa a litre and 84 paisa per litre respectively (including state levies at Delhi) on the back of declining international oil prices.

After today's reduction, petrol price has been cut by Rs 12.27 per litre cumulatively since August.

Diesel price was cut for the first time in more than five years on October 19 by Rs 3.37 a litre when the government decided to deregulate the fuel. This was followed by a Rs 2.25 a litre reduction on November 1 and 84 paisa per litre on December 1. Cumulatively, diesel prices have been cut by Rs 8.46 a litre in four reductions.

There would have been another reduction on November 15 but the government mopped up, raising excise duty on petrol and diesel by Rs 1.50 a litre each.

In the two excise duty hikes, the government has raised its revenue by Rs 10,600 crore this fiscal.

IOC said in a statement: "The prices of petrol and diesel were last revised downwards with effect from December 1 by Rs 0.91 per litre and Rs 0.84 a litre respectively (including state levies at Delhi) on the back of declining international oil prices.

"Since the above price changes, the international prices of both petrol and diesel have continued to be on a downtrend. The Rupee-US dollar exchange rate has however appreciated since the last price change. The combined impact of both these factors warrant a decrease in retail selling prices of both petrol and diesel."

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

