Excise duty on petrol, diesel hiked by Rs 2 per litre; OMCs stocks in focus; here's why

The government on Monday decided to raise excise duty on petrol and diesel by Rs 2, respectively. "The (upwardly) revised excise duty will come into effect on April 8, 2025. The excise duty on petrol was increased to Rs 13 per litre and that on diesel to Rs 10," a notification issued by the Department of Revenue stated.

However, state-owned oil marketing companies (OMCs) have informed that there would be no increase in retail prices of petrol and diesel, following the uptick in excise duty rates.

The fuel excise hike announcement post-market hours today. The state-run OMCs, which include Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), had last cut petrol and diesel prices by Rs 2 per litre in March 2024 (just before the general elections).

Shares of these PSU oil players are likely to be in focus on Tuesday as weak gross refining margins (GRMs) have dragged down profits of OMCs in the past. GRM is the difference between the total value of petroleum products coming out from an oil refinery and Brent crude's raw material price.

To recall, any change in fuel taxes is usually passed on to consumers. But, there would be no change in the retail selling price of petrol and diesel as the excise hike will be set off against the reduction in retail prices that was warranted against a fall in international oil prices.

Brent crude prices have slumped to their lowest since April 2021 as escalating trade tensions between the United States and China stoked fears of a recession that could cut oil demand.

Last seen on Monday, Brent futures slipped $2.43 or 3.7 per cent to $63.15 a barrel while US West Texas Intermediate (WTI) crude futures were down $2.42 or 3.9 per cent at $59.57. India is 85 per cent dependent on imports to meet its crude oil requirements.

The government, led by Prime Minister Narendra Modi, during its 11-year rule hiked excise duty whenever the global oil prices fell. Currently, petrol costs Rs 94.77 a litre in Delhi while Diesel is sold at Rs 87.67 per litre.

(With inputs from PTI)