The government reduced the windfall tax on local crude oil exports on Tuesday from Rs 11,000 per tonne to Rs 9,500 per tonne. The windfall tax on aviation fuel exports (ATF) has, however, been raised from Rs 3.50 per litre to Rs 5 per litre. Diesel fuel now costs Rs. 13 per litre after an increase of Rs. 1. The government has announced that the new windfall tax on oil products will take effect on Wednesday (2 November). The decrease in the windfall tax on the sale of domestic crude oil comes at a time when the price of oil in the world has generally stayed stable at roughly $95 per barrel.
Be aware that the windfall tax, which is adjusted every two weeks, is imposed as a special supplementary excise charge and is intended to absorb the super profits made by domestic crude oil producers as a result of high global crude oil prices. Depending on the price of crude and the refining spread, the levies’ rates fluctuate. Crude oil prices have decreased from $108 per barrel in March of this year to about $95 per barrel. On Wednesday, oil prices increased as data revealed an unexpected decrease in U.S. crude stocks, indicating that demand is continuing to hold up despite significant interest rate hikes that are slowing down global development.
The price of Brent crude futures increased by 17 cents, or 0.1%, to $94.82 per barrel, while the price of WTI crude futures in the U.S. increased by 26 cents, or 0.3%, to $88.63 per barrel. Since China is the second-largest importer of crude oil in the world, the new Covid limits throughout Chinese cities have prompted concerns about demand. This has led to further volatility in crude oil prices. Furthermore, concerns about the supply have persisted due to discussions of a price cap on Russian gas. Furthermore, it is anticipated that poor economic statistics from China and a rise in U.S. oil output will maintain low petroleum prices going forward.
The official had stated that the windfall taxes would be eliminated if the price of crude oil fell below $70-75 per barrel globally. The tariffs may continue subject to fortnight revisions, he noted, unless this price range is established. The government increased the windfall tax on domestically produced crude oil to Rs 11,000 from Rs 8,000 per tonne and the duty on the export of fuel to Rs 12 from Rs 5 per litre in the previous review on October 15, citing an increase in global crude prices during the preceding two weeks. A duty of Rs. 3.5 per litre on the export of jet fuel, which had been eliminated in the previous fortnightly review, was also reinstated.