New Delhi, Feb 25 (IANS): High crude oil prices, due to geo-political concerns, can spike petrol, and diesel prices by Rs 6 to Rs 8 per litre, ratings agency ICRA said.

According to the ratings agency, the lagged revision in RSPs (retail selling prices) of MS (motor spirit) and HSD (high speed diesel) is warranted by current surge in crude prices at Rs 6-8 per litre.

"The impact of the latter on RSPs and the CPI inflation can be absorbed by a roll back in excise duties on these fuels to pre-pandemic levels," ICRA Chief Economist Aditi Nayar said.

"If excise duty on MS and HSD is reduced to pre-pandemic rates, the total revenue loss to the Centre in FY2023 is estimated at Rs 920 billion."

On Thursday, the international crude oil price, in Indian basket terms, surpassed the $100 per barrel mark, for the first time since September 4, 2014, fuelled by intensifying geopolitical tensions between Russia and Ukraine, as well as restrained supply.

However, on Friday, the crude oil prices retreated to above $97 per barrel as a rise in the US oil inventories along with assurance of energy supply from Russia doused prices.

The monthly average RSPs of MS and HSD have been unchanged at Rs 102.9 per litre and Rs 90.5 per litre, respectively, till Friday, despite the recent rise in crude oil prices.

"After the partial cut in November 2021, central excise rates on MS and HSD presently stand at Rs 27.9 per litre and Rs 21.8 per litre, respectively, higher than pre-pandemic period of July 2019-March 2020 by Rs 8 per litre and Rs 6 per litre, respectively," the agency said.

"The Union Budget for FY2023 has forecast the excise duty collections to contract by 15 per cent to Rs 3.4 trillion, after a tepid 0.6 per cent rise included in FY2022 RE (Rs 3.9 trillion), following the excise reduction undertaken in November 2021."

In April 2020 and May 2020, the Centre had enhanced the excise duty on MS and HSD by a cumulative Rs 13 per litre and Rs 16 per litre, respectively, to Rs 32.9 per litre and Rs 31.8 per litre, respectively, owing to the plunge in crude oil prices after the onset of the Covid-19 pandemic.

Subsequently, in November 2021, it had announced a cut in the central excise duty, by Rs 5 per litre on MS and Rs 10 per litre on HSD.

"Effectively, the total cesses levied on MS and HSD by the GoI stand at Rs 27.9 per litre, and Rs 21.8 per litre, respectively, at present.

"These are higher than the rates levied during the pre-pandemic period of July 2019-March 2020 by Rs 8 per litre and Rs 6 per litre, respectively," ICRA said.