Following the decision of Opec and non-Opec countries to cut crude oil production that led to increase in crude oil prices internationally, the Oil and Gas Regulatory Authority (OGRA) has calculated an increase of up to Rs 6.93 per litre in local fuel prices for the month of January 2017. The summary of calculations by OGRA has been forwarded to the Ministry of Petroleum as well as the Ministry of Finance that shows an increase in all the major oil prices, effective from January 1, 2017.
The calculations made by OGRA said that the highest increase has been witnessed in the prices of kerosene oil and high speed diesel. The calculations are made by ORGA for the next month on the average import prices of these oil products and the crude oil during the outgoing month.
"There is a traditional increase in the prices of kerosene oil and both the diesel fuels during December due to high heating demands from most of the countries," said an official of the Petroleum Ministry. According to OGRA summary, the price of kerosene oil is likely to go up by Rs 6.93 per litre, from Rs 43.25 to Rs 50.18 per litre in January, an increase of Rs 3.94 has been recommended by OGRA in the price of High Speed Diesel (HSD) From Rs 75.22 per litre to Rs 79.16 per litre.
The current rate of HSD is Rs 75.22, which is the highest selling product with over 650,000 tons per month in the country, as it is consumed by large generators and heavy vehicle engines. The price of Light Diesel Oil (LDO) has been calculated to be increased by Rs 3.48 per litre to Rs 46.82, from its current price of Rs 43.34 per litre. The LDO is used to run small engines and mills mostly operated in rural areas.
However, a nominal increase of Rs 0.31 per litre has been calculated by OGRA in the price of petrol, the second largest selling brand, which will be available at Rs 66.58 per litre from its existing price of Rs 66.27. Similarly, an increase ranging between Rs 4 and Rs 6 has been calculated in the prices of three main aviation fuel produced in the country, which are JP-1, JP-4 and JP-8.
However, Petroleum Ministry officials maintained that the recent increase in oil prices at the international markets is a reflection of a deal reached by Organisation of Petroleum Exporting Countries (Opec) and some non-Opec members to reduce their output. Though the deal is likely to start from January 1, 2017, the impact was already visible at the trading platforms even before the announcement of the deal. The price of Opec basket of fourteen crudes was around $52 per barrel in December, which was around $43 per barrel a month earlier. At the same time, the average US benchmark 'West Texas Intermediate' (WTI) crude oil was $54 per barrel during December 2016 and that of International Brent crude was $56 per barrel.