The petrol and diesel price in India saw a frequent drop in this year, as the benefits of excess oil supply were passed on to the consumers. But from next year the fuel prices are expected to be raised.
To avoid further drop in the fuel prices, the Organization of the Petroleum Exporting Countries (OPEC) has decided to size down the production of oil to raise the price of the fuel.
This move will result in a reduction of 1.2 million barrels of oil on a daily basis, which will commence from January 2017. The members of the organisation include some of the largest oil producers such as Saudi Arabia, UAE, Iran, Kuwait, Algeria, and Venezuela.
In 2008, OPEC had decided to cut down the production due to financial loses. The current quantity which is planned to reduced will see a total output of 32.5 million barrels of oil per day.
According to the report from CRISIL, the global crude oil price will hover around $50 (approximately Rs 3,374) per barrel and $55 (approximately Rs 3,711) per barrel for the first quarter of 2017.
Apart from that, the report reveals that the petrol price is expected to go up by five to eight percent and the diesel price will see a hike by six to eight percent.
Coming to the fuel prices in India, they are deregulated and linked to the market rates. So, the oil companies will revise the prices on a fortnightly basis depending on the dollar rate and global oil rates.
The oil companies will also account for their margin before finalising the end price to the consumers. If at all the prices are hiked, the petrol price may go up to Rs 71 per litre as compared to the current price of Rs 66 per litre in Delhi and the diesel price will stand at Rs 59 per litre against the current price of Rs 54 per litre.