Higher windfall tax on crude oil kicks in as prices soar to $95 a barrel

New Delhi, Sep 30 (IANS) The government has increased the windfall tax on domestic crude oil produced by companies such as ONGC and Oil India Ltd as prices have shot up to around $95 per barrel.

The windfall tax on petroleum crude has been raised to Rs 12,100 a ton from Rs 10,000 with effect from September 30. The tax helps the government to raise more resources to subsidise the prices of LPG and CNG for consumers. 

Oil prices have now risen by close to 30% in the July-Sept quarter as OPEC+ production cuts led by Saudi Arabia and Russia have reduced global crude supply.

All eyes are now on the next OPEC+ ministerial panel meeting scheduled for Oct 4 when a decision is expected to be taken on whether the supply cuts will continue.

This will determine whether the run towards $100 per barrel in the market will continue, according to analysts. In early September, Saudi Arabia had extended its 1 million bpd cut till December.

Meanwhile the price of benchmark Brent crude November futures are hovering at $95.31 per barrel indicating the firmness in the market.

India imposed the windfall tax on crude oil producers in July last year and extended the levy on exports of gasoline, diesel and aviation fuel after private refiners wanted to make gains from robust refining margins in overseas markets, instead of selling at home. The levy has been cut on aviation turbine fuel to Rs 2.50 per litre from Rs 3.50 per litre and on diesel to Rs 5 per litre from Rs 5.50. These prices are now reviewed every fortnight.