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Hardeep Puri suggested consumers may have to wait two to three months before lower global crude prices are reflected at fuel pumps, provided international oil prices remain stable
A worker updates the revised prices of petrol and diesel at a petrol pump, in Nadia, West Bengal. (PTI)
Brent crude has slipped back to pre-conflict levels after weeks of geopolitical turbulence, reviving hopes of cheaper petrol and diesel in India. But despite the sharp correction in global oil prices, the government says motorists shouldn’t expect an immediate cut at the pump.
Union Petroleum and Natural Gas Minister Hardeep Singh Puri has indicated that while a fuel price cut is possible, it will only be considered if global crude prices remain low and stable for the next few weeks. He also stressed that Indian refiners are still processing costlier crude purchased during the peak of the conflict, meaning the benefit of lower international prices has not yet fully reached consumers.
Responding to questions on a possible fuel price cut, Puri said: “The prices are fixed on the basis of supplies procured a couple of months back. If the situation persists, we will relook it.”
Why Haven’t Fuel Prices Fallen Yet?
The biggest reason is timing.
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Oil marketing companies such as Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum do not refine crude oil the day it is purchased.
According to Puri, the companies are currently selling petrol and diesel refined from crude bought when prices had surged sharply during the West Asia conflict. Until these higher-cost inventories are exhausted, an immediate reduction in retail fuel prices is unlikely.
News18 had reported earlier that fuel retailers do not generally revise prices on the basis of a single day’s movement in crude oil.
Industry officials cited by PTI said petrol and diesel prices are usually guided by average international rates over the preceding fortnight or month. The latest price may have returned to its pre-conflict level, but the average price paid by refiners during June remains substantially higher.
Apart from this, the price of crude oil is only one part of what consumers ultimately pay at the fuel station. The final retail price of petrol and diesel is made up of several components, including refining and freight costs, dealer commissions, central excise duty and state taxes.
This means that a sharp rise or fall in global crude prices doesn’t automatically translate into an equally big change in pump prices. Since taxes make up a significant portion of the retail price, movements in international oil markets are often reflected only partially.
Government policy also plays a key role. During periods of high crude prices, the Centre or state governments may cut taxes, while oil marketing companies may temporarily absorb part of the increase instead of passing it on immediately. These measures help soften the impact of volatile global oil prices on consumers.
How Long Could It Take?
The minister has suggested that consumers may have to wait two to three months before lower global crude prices are reflected at fuel stations, provided international oil prices remain stable during that period.
“If this (international prices) persists for the next two-three months, then that would be a legitimate question. But that’s hypothetical,” he said, when asked about relief to consumers.
Oil Companies Recovering Losses
Another factor weighing on fuel prices is the financial hit suffered by state-run oil companies during the recent spike in crude prices.
Puri said public sector oil marketing companies incurred losses of about Rs 74,781 crore during the April-June quarter after selling petrol, diesel and LPG below cost while global crude prices remained elevated. These losses are one reason why companies are unlikely to rush into cutting pump prices immediately.
Puri also defended the government’s handling of fuel prices during the surge in global oil rates, arguing that consumers were largely protected from the full impact through reductions in central excise duty.
He pointed out that between June 2022 and June 2026, petrol prices in Delhi rose by around 5.6 per cent, while diesel prices increased by about 6.2 per cent, significantly lower than the hikes seen in many developed nations and neighbouring countries.
The minister said international crude oil had at one stage touched $128 per barrel, but domestic fuel prices were not raised in line with the global spike because the Centre cut excise duty by Rs 10 per litre on both petrol and diesel, cushioning consumers from a much steeper increase.
He added that none of India’s nearly 1,07,000 retail fuel outlets reported a dry out during the period from late February through June.
About the Author
Apoorva Misra is a News Editor at News18.com with a keen interest in politics and current affairs. She loves uncovering fresh angles and telling stories through long-form features and explainers. Foll…Read More
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