Crude oil has a raised windfall tax of Rs 10,000 per tonne

18 Sep 2023 , 11:59 AM

The centre raised the windfall tax on the sale of domestic crude oil on Friday to Rs 10,000 per tonne.

The charge was set at Rs6,700 per tonne for the previous two weeks. The revised prices would go into effect on Saturday, September 16.

The special additional excise duty (SAED), or levy, on the export of diesel would also be decreased, from Rs6 per litre to Rs 5.50 per litre, according to a notification from the ministry of finance. The tax on jet fuel will drop from Rs 4 per litre to Rs 3.5 per litre. However, the additional duty on petrol exports will continue to be zero.

With effect starting on July 1, 2022, the Centre initially levied windfall taxes on the sale of domestically produced crude oil as oil exploration and production businesses generated substantial gains amid multi-year high crude oil prices following Russia’s invasion of Ukraine. The increased tax on petrol, diesel and jet fuel exports was also implemented at a time when private refiners were mostly selling their products abroad due to higher pricing there rather than on the home market.

When the windfall tax on crude is raised, the price of crude is over $90 per barrel. Currently, the price of Brent is around $93.7.

As OPEC+ has reduced output and Saudi Arabia and Russia have pledged voluntary cuts, prices are climbing amid supply concerns. According to analysts, increased demand because of expected winter heating needs might keep prices high.

Prior to economic headwinds limiting global demand growth in 2024, the International Energy Agency had stated last month that the output cuts may deplete oil stocks for the remainder of 2023, potentially sending prices even higher.

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