The oil ministry is seeking an increase in diesel and cooking fuel prices on Friday as well as a cut in taxes on fuel products, a ministry source said, moves that could push up inflation further.

A panel of ministers will meet on Friday to discuss raising the prices of the subsidised fuels. Analysts have warned that not lifting prices in line with rising crude oil could put the country's fiscal deficit under strain.

"There is no option but to increase (prices)...," the source, who did not wish to be named due to the sensitivity of the matter, said.

"You cannot preserve polity at the expense of economy."

Goldman Sachs, widely seen as one of the most influential banks in commodities, said Brent crude oil prices could fall by USD 10 to USD 12 a barrel by the end of July after the International Energy Agency (IEA) announced a surprise release of 60 million barrels of oil from member countries.

"We would expect the release to have less of an impact on prices further out the curve, as the oil would be absorbed to meet current demand. Net, we would expect that the potential impact on Brent crude oil prices in 2012 to be closer to USD 5-USD 7 a barrel on average."

At 1:40 p.m. EDT (1740 GMT) Brent crude oil prices were already down USD 5.86 at USD 108.35 a barrel, but were well above an earlier intraday low of USD 105.72.

Prices were largely unchanged from before the publication of the note.