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New Delhi - India was expected to hike diesel prices on Friday, although a delay in a government meeting to decide on the politically unpopular decision raised questions as to whether officials were in full agreement.
Oil prices fell 6% on Thursday after major consuming countries announced an emergency release of stocks, pushing benchmark Brent crude to a four-month low and providing a window for India to raise prices with less pain for consumers.
Since it was first elected in 2004, the government of Prime Minister Manmohan Singh has more often than not refrained from pushing through tough reforms in favour of pleasing its predominantly rural voter base.
It has delayed a decision on increasing diesel and other fuel prices for months, even as its subsidy burden mounts.
Persistently high inflation, currently the highest among major Asian economies, as well as its handling of a spate of corruption scandals has added to the government's reluctance and led to what many critics say is a state of policy paralysis in New Delhi.
"We are working on more options, the final decision will be announced after the meeting," Oil Minister Jaipal Reddy told reporters, adding that the meeting had been rescheduled for 19:00 local time, a delay of 6 hours.
Sources familiar with the matter had said a price rise was likely. The government could also cut taxes and Reddy said more options were being considered.
Reddy told Reuters earlier on Friday the International Energy Agency's (IEA's) planned release of strategic stockpiles would give only temporary respite.
"I cannot speculate on the future trend but in the short run there is no hope. Even if there is a slight increase in production those gains will not be made available to us because of unbridled speculation in the financial markets," he said.
"We don't know whether this (softening in global prices) is a stable trend," he added.
JP Morgan cut its forecast for benchmark Brent oil for the third quarter to $100 a barrel from $130 after the IEA move but on Friday global crude prices were already rebounding.
Half of India's population are farmers, but the government needs to cut its massive subsidy bill on cooking gas and diesel in order meet its budget targets.
A year ago, New Delhi freed up petrol prices, which have risen about 23 percent since then, and said it could do the same with diesel. International oil prices LCOc1 are about 39% higher over the same period.
Oil prices fell 6% on Thursday after major consuming countries announced an emergency release of stocks, pushing benchmark Brent crude to a four-month low and providing a window for India to raise prices with less pain for consumers.
Since it was first elected in 2004, the government of Prime Minister Manmohan Singh has more often than not refrained from pushing through tough reforms in favour of pleasing its predominantly rural voter base.
It has delayed a decision on increasing diesel and other fuel prices for months, even as its subsidy burden mounts.
Persistently high inflation, currently the highest among major Asian economies, as well as its handling of a spate of corruption scandals has added to the government's reluctance and led to what many critics say is a state of policy paralysis in New Delhi.
"We are working on more options, the final decision will be announced after the meeting," Oil Minister Jaipal Reddy told reporters, adding that the meeting had been rescheduled for 19:00 local time, a delay of 6 hours.
Sources familiar with the matter had said a price rise was likely. The government could also cut taxes and Reddy said more options were being considered.
Reddy told Reuters earlier on Friday the International Energy Agency's (IEA's) planned release of strategic stockpiles would give only temporary respite.
"I cannot speculate on the future trend but in the short run there is no hope. Even if there is a slight increase in production those gains will not be made available to us because of unbridled speculation in the financial markets," he said.
"We don't know whether this (softening in global prices) is a stable trend," he added.
JP Morgan cut its forecast for benchmark Brent oil for the third quarter to $100 a barrel from $130 after the IEA move but on Friday global crude prices were already rebounding.
Half of India's population are farmers, but the government needs to cut its massive subsidy bill on cooking gas and diesel in order meet its budget targets.
A year ago, New Delhi freed up petrol prices, which have risen about 23 percent since then, and said it could do the same with diesel. International oil prices LCOc1 are about 39% higher over the same period.
