Oil prices are expected to fall by up to five per cent in line with the decline in global crude prices effective from November 1.
Sources told The Express Tribune that average price of crude in the global market dropped by three per cent in October compared to the price in September.
“Actual impact of the decline in oil prices will be clear by the end of this month after assessing the effects of inland freight equalisation margin and cost of transportation which are yet to be worked out,” a source said.
According to sources, the price of petrol had dropped by Rs4 per litre (five per cent) by October 25, kerosene oil Re1 per litre, high octane blending component (HOBC) Rs4 per litre, high-speed diesel (HSD) Rs0.20 per litre, light diesel oil Rs1.6 per litre and jet fuel Rs2 per litre.
At the end of previous month, the government had increased prices of three major petroleum products, with maximum increase of five per cent made in the price of petrol. HOBC price rose by Rs2.72 per litre while HSD price went up by Rs1.51.
At present, diesel is being sold at Rs94.15 per litre, HOBC Rs112.65, petrol Rs88.95, light diesel oil Rs83.52 and kerosene oil Rs86.62.
An energy expert said oil prices had started coming down in the international market due to improvement in supply as refineries resumed full operations following maintenance work in August and September. “In October, world refineries are operating at full capacity after undergoing maintenance work, therefore, prices normally fall due to improved supply of petroleum products,” he said.
Some analysts argued higher oil prices also forced consumers to curtail oil consumption, resulting in a decline in prices.
An oil industry source said a slight reduction in crude prices had been noted so far and “the government is expected to adjust the price fall in petroleum levy and keep oil prices unchanged to earn more revenue.”
Since June, the government has deregulated prices of petroleum products including petrol, HOBC, light diesel oil, jet fuel (JP-1, JP-4 and JP-8) and refineries and oil marketing companies can announce ex-refinery and ex-depot prices keeping in view the import parity prices. However, in a controlled mechanism the government keeps a watch on them and announces prices on their behalf.
Published in The Express Tribune, October 26th, 2011.