Following the decision of Organisation of the Petroleum Exporting Countries (OPEC) and non-OPEC members to cut crude oil production that led to increase in crude oil prices internationally, the increase in prices of petrol was calculated at Rs 1.77, kerosene oil at Rs 14.31, light diesel oil at Rs 10.11 and high-speed diesel at Rs 3.99 per litre, at the rate of 17 percent sales tax.
ATF or jet fuel price was hiked by Rs. 4,161 per kilolitre (kl), or 8.6 per cent, to Rs. 52,540.63 a kilolitre in Delhi.
The government has also chose to review the decision of fixing oil prices on a fortnight or monthly basis.
The tax hike comes as prices for crude oil, which diesel fuel is refined from, have steadily climbed.
Only partial increase in MS Petrol and HSD of what had been recommended by OGRA was passed on to the end consumers for only the month of December, 2016.
Prices of diesel and petrol prices have been hiked on Sunday, officials said.
Drivers of diesel fueled vehicles will be hit with an nearly 16 cent per gallon state tax hike on January 1, which was part a fuel tax increase approved and signed in to law this past October.
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"In line with the prime minister's instructions to provide maximum relief to the common man and keeping in view that Kerosene Oil and LDO are used by the low-income people, it has been made a decision to maintain the prices of Kerosene and LDO at current level for the entire month of January, 2017", the Finance minister said, adding, "It has also been decided that the prices of MS RON 92 Petrol and HSD will be frozen and will remain unchanged at the current level till midnight January 15, 2016".
'The supermarkets are likely to keep their prices down till early January, but after that average prices are set to go up pretty quickly.
It said the movement of prices in the worldwide oil market and foreign exchange rate shall continue to be monitored closely and developing trends of the market will be reflected in future price changes.
"Increase in Selling Price of Diesel by Rs. 0.97/litre (excluding State levies)", it said.
Crude oil price is almost hovering around $55 per barrel.
While announcing the government's policy on petroleum products prices for January, 2015, Dar said Ministry of Petroleum & Natural Resources and Oil and Gas Regulatory Authority (Ogra) had recommended increase from the beginning of the New Year.