The Oil and Gas Regulatory Authority, which controls the country’s prices for petroleum products, has proposed a Rs7 reduction in June’s petrol prices.
The government has been sent a summary by the oil sector regulator. The new petrol price will be Rs75.54, if approved. However, they suggested an increase in the price of high-speed diesel by Rs5 per liter. Ogra also suggested that rs11.88 kerosene oil prices and Rs9.37 light diesel prices.
Like other goods whose prices are dictated by demand and supply factors on the market, the government controls the oil prices. Ogra introduces new rates for the next month at the end of each month, in a report submitted to the government.
However, as per the overview, the Government may or may not adjust rates. Ogra, for instance, had proposed a reduction in Rs20 for May, but the government only reduced Rs15 prices.
Three times since March 1, the government has cut local prices, resulting in an overall decrease of Rs35 per liter to Rs81.58 per liter (official rates). It became likely after the crude oil prices plummeted globally.
As more countries embraced social distance and went into lockdown to contain coronavirus spread, travel came to a grinding halt. This turned into a suppression of global demand which caused the crashing of oil futures. American crude (WTI), for example, which traded above $60 a barrel in January, dropped in April ‘s negative sector.
Oil traders simply sold oil while also offering purchasers money because they ran out of storage for new stocks or those in transit.
Local prices are determined by the government based on past international oil prices. That means it calculates prices by taking into account the rates at which the country imported crude oil. That means that the oil you are consuming today had been imported in its raw form weeks before.
International oil prices rebounded in May but are still low.
