India, the world’s third-largest consumer of crude oil, imports over 85% of its requirements. Despite the recent decline in global crude oil prices, public sector oil marketing companies (OMCs) are likely to hold off on reducing petrol and diesel prices and resuming daily price revisions. According to a senior official from the petroleum ministry, the volatility in international oil prices remains high, prompting caution before passing any benefits to consumers.
Recent price drops had sparked speculation that OMCs—Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL)—might lower fuel prices and return to daily price adjustments. These revisions had been suspended over two years ago due to extreme price volatility caused by factors such as the Russia-Ukraine war, which pushed international oil prices to multi-year highs.
Since then, retail petrol and diesel prices have only been adjusted a few times, primarily due to excise duty cuts and just before this year’s Lok Sabha elections. Currently, petrol in Delhi costs Rs 94.72 per litre, and diesel is priced at Rs 87.62, with prices varying across states due to differing state taxes.
The ministry official explained that various global factors continue to influence oil prices, citing decisions like the recent US Federal Reserve rate cut, China’s purchasing patterns, refinery margins, and other key economic indicators. These factors create uncertainty, and their effects on oil prices tend to manifest with a time lag. OMCs and the government are therefore waiting for more stable international oil prices before making any decisions.
Brent crude, the global benchmark, fell below $70 per barrel on September 10 for the first time since December 2021 but has since risen to over $74 per barrel. Earlier in July, it was trading at over $85 per barrel, and in April, it briefly surpassed $90. Although these prices are lower than 2022 levels, volatility remains due to unpredictable geopolitical situations and production adjustments by major oil producers.
The recent decline in oil prices has been attributed mainly to concerns over reduced demand in China, a major crude importer. Industry sources indicate that OMCs may be more comfortable resuming daily price revisions once Brent crude stabilizes below $80 per barrel. At that price point, OMCs would avoid incurring under-recoveries on petrol and diesel sales.
