The government expects prices of petrol and diesel to fall by nearly 50 paisa as that of Brent crude has softened in the past week, a government official said on condition of anonymity.
Fuel prices are likely to drop in the next 4-5 days, the official said, adding that the freight-on-board price of petrol has dropped from $83.87 to $79.31 per barrel, while that of diesel has contracted from $87.73 to $82.72 in the international market. This is likely to lead to a further reduction in the domestic retail fuel prices, the official added.
Freight-on-board refers to the point at which costs and risks associated with shipped goods shift from the seller to the buyer.
Domestic prices of fuel are revised daily by oil marketers and depend on international prices and currency exchange rates. The prices of petrol and diesel fell today after a 21-day gap by 11 paisa and 14 paisa, respectively, according to data on the website of Indian Oil Corporation.
That's after Brent crude eased in the past week to below $71 per barrel as Saudi Arabia —the world's largest oil exporter—offered to ramp up supply to some customers, while the U.S. is said to be tapping emergency supplies to offset losses around the world, Bloomberg reported.
The U.S. by pulling out of the Iran nuclear deal seeks to end crude exports from the Middle-East nation and is mulling releasing oil from its 660 million-barrel Strategic Petroleum Reserve.
Saudi Arabia and its allies are attempting to cut supply losses elsewhere within the Organization of Petroleum Exporting Countries, spurred due to the spiraling economic crisis in Venezuela and erratic exports by Libya, among others.
Brent crude touched $80 per barrel for the first time in May since November 2014.
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