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Petrol, diesel has been hiked for the 3rd straight day.

Petrol price has been hiked by 54 paise per litre, while diesel by 58 paise for the 3rd straight day after oil PSUs ended 82-day hiatus in rate revision. On Monday also, petrol and diesel prices were hiked by 60 paisa per litre, for the second day in a row by state-owned oil firms. Petrol price in Delhi was hiked to Rs 72.46 per litre from Rs 71.86 on Sunday, while diesel rates were increased to Rs 70.59 a litre from Rs 69.99, according to a price notification of state oil marketing companies.

Earlier on Tuesday, oil companies raised prices by 60 paisa per litre on both petrol and diesel after ending a 83-day hiatus in daily rate revision. Daily price revision has restarted, an oil company official said.

In a bid to increase revenues during the nationwide lockdown, several state governments raised taxes imposed on transportation fuel.

Already, the gap between cost and sale price of petrol and diesel for the OMCs has reached around Rs 4-5 per litre. If this has to be covered over a period of time, given there is no further increase in the global prices, auto fuel prices may be increased by 40-60 paise per day for a couple of weeks to cover the losses.

The increase in retail price under daily price revision would largely depend on prevailing oil prices and global oil market at the time to determine the retail price. Going by the current trend, crude prices are way above price levels in April when even benchmark Brent crude had slipped below $20 a barrel. Brent is now trading at over $42 a barrel.

However, lockdown has also curved demand for auto fuel. This could maintain some check on prices.

Raising retail prices became important for the OMCs now as the recent steep excise duty hike without the resultant increase in petrol and fiscal prices, had substantially brought down its marketing margins from a record high level of Rs 12-18 per litre.

If it is unable to raise prices when the global crude prices are rising, it would start incurring losses that will get steeper.

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