Motorist in the country enjoyed frequent drop in petrol and diesel prices this year, as benefits of surplus oil supply were being passed on to consumers. However, in efforts to avoid further drop in prices, the Organization of the Petroleum Exporting Countries (OPEC) has decided to cut down production with an aim to raise prices. This will mean that around 1.2 million barrels will be cut down on a daily basis and will begin from January 2017 onwards. The members include some of the largest oil producers such as Saudi Arabia, Iran, UAE, Kuwait, Algeria, and Venezuela.
Back in 2008, OPEC had announced a cut down on production citing financial losses. Considering the current quantity which is planned to be reduced, the total output will now stand at 32.5 million barrels per day. A CRISIL report indicates that the global crude price will remain between $50 per barrel and $55 per barrel for first half of 2017. The report further reveals that that petrol prices might rise by 5-8 per cent and diesel might cost dearer by 6-8 per cent.
In India, the fuel prices are deregulated and are linked to the market rates. Therefore, the oil marketing companies in the country revise their prices on a fortnightly basis considering the dollar rates and global oil rates. The companies also account for their margin before releasing the end price to the consumers. If the prices are hiked, as against a current petrol price of Rs 66 per litre in Delhi, consumers will end up paying around Rs 71 per litre, while diesel might cost around Rs 59 per litre as against the current price of Rs 54 per litre