Petrol, Diesel Prices: Hardeep Singh Puri Reveals When Fuel Rates Could Be Cut

Despite the reduction in prices of crude oil on a global level, Indian consumers may have to wait a little longer for relief at the fuel pumps. Union Petroleum and Natural Gas Minister Hardeep Singh Puri indicated that any reduction in petrol and diesel prices will depend on whether international crude prices remain stable over the coming weeks, rather than just fluctuate over the short term.

Brent crude, which is the global benchmark for oil prices, has significantly cooled down after recent volatility that is driven by geopolitical tensions in West Asia. This relaxation of crude prices globally has sparked expectations towards a price relief in retail fuel in India. However, the government believes that it is too early to make this decision.

While addressing this issue, Puri said that a cut in petrol and diesel prices would be a potential consideration only if the crude prices continue to remain low over the next few weeks. The minister has stressed that fuel pricing cannot be solely reliant on temporary market movements, as international oil markets are subject to sudden disruptions. Another reason for this prudent approach is that the supply chains are right now linked to the geopolitical standings of the countries at war.

Another factor that is prominent is the inventory which is held by India’s oil marketing companies (OMCs). These companies are processing crude oil that was purchased at a much higher price during the time of peak geopolitical tensions. As a result, refiners have yet to benefit fully from this reduction. Puri said that only after cheaper crude, which was purchased in recent weeks, reaches Indian refineries, it will be seen whether the benefits can be passed on to consumers through lower retail prices.

The minister also highlighted that the state-owned OMCs faced significant financial strain during the April-June quarter. These companies incurred losses of nearly Rs 74,781 crore, according to a report by LiveMint. These losses were incurred while selling petrol, diesel, and LPG at prices much lower than their costs during the period of price surge. These losses have also influenced the timing of any possible reduction in retail fuel prices.

India imports more than 85 per cent of its crude oil requirements. This makes domestic fuel prices highly sensitive to global oil movements. However, retail fuel prices are not directly linked to the daily changes in international crude rates. Factors such as taxes, import duties, refining costs, transport costs, and pricing decisions made by OMCs; all influence the final price paid by the consumers.