In the face of declining global oil prices, the Oil & Gas Regulatory Authority (Ogra) may recommend up to a 6% reduction in domestic oil prices for the month of June 2011. Officials told that the government may reduce oil prices next month, though the decline may not be exactly in line with international oil price movements given the depreciation in the value of the rupee over that period.
According to the government’s analysis, global oil prices declined by between 1.5% and 6% for various subcategories of fuel over the past month, but the rupee also lost approximately 0.7% of its value against the US dollar, the currency in which nearly all international oil contracts are denominated.
The move to reduce oil prices may help dent the impression amongst large sections of the public that the government only increases the domestic cost of fuel.