New Delhi. International crude oil prices fell to a three-year low before recovering marginally, but a cut in domestic petrol and diesel prices is possible only if crude oil remains at low levels, industry sources and officials said on Thursday.
Global oil benchmark Brent crude futures fell below $70 a barrel on Tuesday. This happened for the first time since December 2021. But crude oil climbed again as Hurricane Francine affected crude oil supplies in the Gulf of Mexico. On Thursday, Brent crude remained above $71 a barrel while West Texas Intermediate rose to near $68. Officials said that if the downward trend in international crude oil prices continues, petrol and diesel prices will be revised. Petrol and diesel prices have remained stable for more than two years now except for the pre-election cut earlier this year.
Petroleum Secretary Pankaj Jain told reporters at an event here that if international oil prices continue to fall, petroleum companies will take appropriate decisions about reducing fuel prices. Industry sources said that all three public sector fuel retailers are making good profits on petrol and diesel, but they want to ensure the trend of improvement in prices before deciding to cut prices.
An official said, “Petroleum marketing companies do not want a situation where they cut prices and international prices increase.” Brokerage firm Emkay Global Financial Services has expressed hope that Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) will cut petrol and diesel prices before the assembly elections in Maharashtra.
MK Global said, “The model code of conduct is in force in Jammu and Kashmir and Haryana for a month. In such a situation, we expect a reduction around Diwali and before the model code of conduct for Maharashtra elections. There may be a reduction of Rs 2 per liter on petrol and diesel.” India imports 85 percent of its petroleum needs and its fuel pricing is based on international rates.
Petroleum marketing companies, despite having pricing freedom, have not revised prices in line with costs since the end of 2021. They cut prices by Rs 2 per litre just before the general elections and then froze the rates.
The price of petrol in the national capital is Rs 94.72 per liter while the price of diesel is Rs 87.62 per liter.