Diesel Can Be Market-Priced By September As Crude Falls To $100

NEW DELHI: With the losses of state-run oil marketers on diesel sales below cost falling to under a rupee per litre, brokerage firm Goldman Sachs estimated the monthly price hikes would end after September assuming oil prices remain around the current $100 level.

Estimating diesel under-recoveries, or losses, to fall to 30 paise a litre after the price hike on September Goldman Sachs said in a report: "This implies we could effectively be done with the monthly cycle of diesel price increases in next two months and diesel will be market-priced."

In January 2013, the government allowed oil marketing companies (OMCs) to monthly raise diesel rates in small doses of 40-50 paise a litre towards wiping out losses.

Since then, rates have cumulatively risen by 11.24 per litre in 18 instalments. OMCs, effective Aug 16, are incurring combined daily under-recovery of about 230 crore on the sale of diesel, PDS kerosene and domestic LPG.

Meanwhile international crude prices hovered near 14-month lows of $100 a barrel as worries over conflict in Iraq eased, and as higher Libyan oil output added to ample supplies coupled with weak demand. Price of Indian basket decreased to $100.04 per barrel.

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