New Delhi: Petrol prices should have been cut by Rs 2.20-2.30 a litre as global rates have fallen to 18-month low but oil companies will not reduce prices as they watch the volatile rupee that is making imports costlier.

Rupee depreciating to an all-time low of Rs 57.30 to a US dollar has wiped away most of gains arising from oil dropping below USD 90 a barrel for the first time since December 2010.

"The oil companies are fully cognisant of facts. They are watching the volatility (in rupee and global oil prices). Very soon they will take a decision," Oil Minister S Jaipal Reddy told reporters here.

State-owned oil firms, who as per practice revise rates of petrol on 1st and 16th of every month based on average imported cost and forex rates of the previous fortnight, have skipped changing rates on June 16.

"There is lot of volatility in prices of crude oil and value of rupee. There is double volatility," Reddy said. "We are relieved at the fact that price of crude oil have eased.

But this has been upset by decrease in value of rupee.

"We are watching the situation with keen interest and we are watching it on a day to day basis," he said, adding that for a nation that is 76 percent dependent on imports to meet its requirements, value of rupee becomes very important.

Officials in his ministry said the gasoline cracks or the difference between cost of raw material (crude oil) and the price of product (petrol) had narrowed to just USD 3 per barrel. In comparison, cracks for diesel were as high as USD 12-13 a barrel.

With such narrow spread, any upward movement in crude oil price or devaluation of rupee would force an increase in price in near future, if the rates were to be cut now.