The crisis in oil-rich Iraq is having its impact in India. Effective midnight of July 1, oil marketing companies (OMCs) have hiked the price of petrol by a steep Rs 1.69 per litre and diesel by 50 paise a litre, excluding local sales tax or VAT, which means the hit on the motorist’s wallet will be higher.

Petrol in Mumbai will now cost Rs 81.75 per litre, up Rs 1.59 from Rs 80.16 a day ago. Diesel rates have risen by 17 paise in Mumbai to Rs 66.01 per litre (both prices excluding local taxes).

Over a one-year period, petrol price has risen by Rs 5.96 per litre, from Rs 75.79 to Rs 81.75 in Mumbai. In comparison, diesel rates are up sharply by Rs 9.02 per litre – from Rs 56.99 on July 1, 2013 to Rs 66.01 on July 1, 2014 (see detailed petrol and diesel price charts below).

A statement issued by IndianOil Corporation (IOC), the country’s largest OMC says, “Due to geo-political unrest in the Middle East, there has been significant increase in international oil prices during the past two weeks. The international prices of MS (motor spirit) have increased by more than US$ 4 (Rs 240) per barrel, and the rupee-dollar exchange rate has also deteriorated. The combined impact of both these factors has warranted an increase in petrol prices by Rs 1.69 a litre (excluding state levies).” One bbl or barrel is the unit of volume for crude oil and petroleum products and equals 42 US gallons or 35 UK (imperial) gallons, or approximately 159 litres.

Diesel prices have been hiked in line with the earlier UPA government’s January 2013 policy of raising prices in small doses (50 paise) every month to eliminate the subsidy. However, according to IOC, despite the over 15  hikes since then, OMCs are losing Rs 3.40 a litre on diesel fuel, up from Rs 2.80 a litre last month, due to firming up of international oil rates and the rupee depreciating against the US dollar.

Besides diesel, the state oil firms lose Rs 33.07 a litre on kerosene sold through the public distribution system (PDS) and Rs 449 per 14.2-kg domestic subsidised LPG (cooking gas) cylinder. IOC estimates that under-recoveries for the industry on sale of petrol, LPG and diesel for fiscal year 2014-15 will be Rs 107,850 crore.