The Organisation of Petroleum Exporting Countries decision to cut production by 900,000 barrels per day is likely to firm up crude oil prices to $27-28 dollars a barrel, which will necessitate an upward revision in petrol and diesel prices.

"The OPEC decision is likely to result in firming up of the Indian basket of crude by $2 to over $27 a barrel," M S Ramachandran, chairman, Indian Oil Corporation, told reporters in New Delhi on Friday.

The state-run oil retailers had on August 31 increased the petrol and diesel prices by Rs 2.29 and Rs 1.49 a litre, respectively and the government froze LPG and kerosene prices, and asked the oil firms to bear Rs 106 per cylinder and Rs 3 per litre loss of the two mass-consumed cooking fuels.

The increase in crude prices would necessitate further hike in petrol and diesel prices while oil companies' losses on selling LPG and kerosene below the cost will further rise.

"We hope refinery margins will remain at $3 a barrel as we expect product prices to rise with increase in crude prices," he said.

B K Chaturvedi, petroleum secretary, however, said there was no need for panic.

"We imported 20 per cent more than our requirement during the first quarter of the current fiscal. We have adequate stocks (to act as buffer during immediate price rise)," he said.

During April-July, India imported 30.198 million tones of crude for $5.615 billion as against 26.474 million tonnes ($4.731 billion dollars) in the same period the previous year.