Low oil prices, a falling ruppie, and inflation prevent the reduction of fuel prices.

Brent crude was down $3.74 a barrel to $86.72 on Friday . The rupee value against the dollar will plunge further preventing the margins from rising .

New Delhi: The turmoil in the global oil market and the dramatic decline in the rupees value against the Greenback as a result of the US central bank's interest rate hike have held a cut in domestic fuel prices.Brent crude was down $3.74 a barrel to $86.72 on Friday, as the rate hike strengthened the dollar and made it much more expensive for traders to buy oil, leading to increasing worry about demand contraction as a result of the recession.But news of Chinas oil demand regaining and supply fears over the latest Russian push to raise the ante against Ukraine failed to discourage oil prices from soaring.Brent, which accounts for almost a quarter of India's oil imports, has dropped below $90 per barrel for the second time this month, to sit at 7-month lows.

However, pump rates are unlikely to be reduced anytime soon for two main reasons.Oil companies that control 90 percent of the fuel retail market have accumulated losses because they failed to raise prices for months in conjunction with the rise in oil prices in order to stem an already high inflation.Two, the rupees weakening increases margins and slows down the recovery process.Due to holding petrol, diesel, and cooking gas prices, which amount to about $85 a barrel of oil, IndianOil, Hindustan Petroleum, and Bharat Petroleum collectively reported a loss of over Rs 18,000 crore in the first quarter.

The recent drop in oil prices has erased the gains on petrol, but the firms are also losing money on diesel.The rupees' value against the dollar will plunge further preventing the margins from rising.In the face of rising inflation, oil market volatility remains a concern.