The basket of crude oil that India buys has hit a decade high of $121 per barrel, but retail selling prices of petrol and diesel continue to remain frozen.
The Indian basket on June 9 touched $121.28, matching levels seen in February/March 2012, according to data available from the oil ministry's Petroleum Planning and Analysis Cell (PPAC).
As per the PPAC, the Indian basket of crude oil averaged $111.86 per barrel between February 25 and March 29 - the immediate period after Russia's invasion of Ukraine sent oil on fire.
It averaged $103.44 a barrel between March 30 and April 27.
International oil prices held near a 13-week high on Thursday, underpinned by robust demand from key buyers like the US.
They, however, pared some gains on Friday, with Brent crude futures for August losing 81 cents to trade at $122.26 per barrel. US West Texas Intermediate crude for July was at $120.72 a barrel, down 79 cents.
Retail fuel rates, however, continue to be on a freeze in India.
State-owned fuel retailers Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) are supposed to adjust petrol and diesel prices daily in line with the cost, but they have been since November 2021 moderating pump rates.
India is 85 per cent dependent on imports to meet its oil needs and so local pump rates are benchmarked against international prices.
Industry sources said local pump rates are benchmarked to around $85 per barrel crude oil price but oil firms haven't changed rates as they aid the government in trying to control inflation, which already is ruling at an almost eight-year high of 7.8 per cent.
Fuel prices, particularly diesel, have a cascading effect on inflation as an elevated price will lead to higher transportation costs, spiking prices across the board, including essentials like vegetables.
The sources said the industry was selling petrol at a loss of about Rs 18 per litre and diesel at Rs 21 a litre.
Petrol and diesel prices were last revised to align with the cost on April 6 and have been on freeze since then. Last month, rates were reduced after the government cut excise duty on petrol by Rs 8 per litre and that on diesel by Rs 6.
Last week, Oil Minister Hardeep Singh Puri stated that oil companies are responsible corporate citizens and that the government wasn't dictating retail selling prices.
Despite a surge in oil prices, the three state fuel retailers first froze petrol and diesel rates for a record 137 days beginning in early November 2021 when five states, including Uttar Pradesh, went to the polls and then went into a hiatus again in April that is now 65 days old.
While state-owned oil marketing companies (OMCs) have maintained retail operations despite losses, private sector retailers like Reliance-BP and Nayara Energy have curtailed operations to cut losses. In some places, Nayara is selling fuel at rates that are Rs 3 a litre higher than public sector competition.
Petrol in Delhi, currently, costs Rs 96.72 a litre and diesel is priced at Rs 89.62.