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MUMBAI: After two consecutive hikes in petrol prices in many parts of the country on January 3 and January 5, which led to an increase of Rs 2.25 per litre in Mumbai alone, the state-owned oil marketing firms may slash the prices by Rs 1.5-2 a litre, on account of the softening international crude oil prices and the appreciation of the Indian rupee against the US dollar. "We have started making nominal profits on petrol and may pass on the benefit to the consumers once the oil firms meet to review the prices," said a director on the board of a leading oil retailer without elaborating on the quantum of reduction.

Oil marketing firms Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) meet fortnightly to review petrol prices. Confirming the move, a board member of a Mumbai-based oil firm said, "The international crude oil prices have softened in the last few days. We are keeping a watch on it as well as the movement of the Indian rupee and will revise the petrol prices accordingly."

The international crude oil price of Indian basket fell to $104.77 per barrel (bbl) on Friday compared to $108 per bbl on January 1 as Iranian supply outlook brightened after a landmark deal to curb Tehran’s disputed nuclear programme takes effect on January 20. In rupee terms also, the crude oil price of Indian basket declined to Rs 6,489.45 per bbl on Friday compared to Rs 6,726 per bbl on January 1. This is because the rupee gained 38 paisa to close at a one-month high of 61.52 against the dollar on Monday after local stocks surged and exporters and banks sold dollars, lifting the rupee to its highest level since closing at 61.25 on December 11.

Though the oil firms may cut the prices by Rs 1-1.5, along with the taxes and state levies, it may add up to a reduction of about Rs 2 a litre at the petrol pumps, said an oil analyst. As a thumb rule, for every dollar dip in crude oil prices, petrol prices come down by 33 paisa a litre. Similarly, for every depreciating Indian rupee against the US dollar, petrol prices go up by 77 paisa a litre.

At Rs 81.31 per litre, the prices are highest in Mumbai amongst all state capitals. The oil marketing firms revised petrol prices by 96 paisa a litre on January 3, and by another Rs 1.79 a litre on January 5 citing ’state specific’ costs.