As global crude oil prices slipped to pre-war levels, all eyes are on domestic prices of petrol and diesel, which soared in May due to the conflict in Middle East.
On Thursday, Union Petroleum Minister Hardeep Singh Puri was asked about the likelihood of lowering fuel prices in India. Responding to media, the minister said the scenario would be practical if oil prices stayed low for the next few weeks.
Public sector oil marketing companies, including Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL) and India Oil Corporation Ltd (IOCL), have raised petrol and diesel prices by a cumulative ₹7.5 per litre each through multiple revisions in the second half of May.
According to Puri, oil marketing companies are still processing crude they bought at the height of the West Asia crisis. Hence, it would take weeks before they can consider lowering oil prices even though the international crude oil prices have tumbled.
Typically, oil companies buy crude oil at least two months in advance. Hence, raw material that is being processed currently is what was actually bought in April or early May when international prices were at their peak.
Crude oil prices began seeing a drop only in the second half of June after the US and Iran reached an initial agreement to end the war. So it is likely that the oil marketing companies could mull lowering the fuel prices by second half of August.
Puri pointed out that oil marketing firms suffered ₹74,781 crore losses for selling petrol, diesel and LPG below cost in the first quarter of the financial year ending June 30.
Nayara Energy, which is India's largest private fuel retailer, has lowered prices of petrol by ₹5 per litre and diesel by ₹3 per litre. But it should be noted that Nayara was also the first to raise fuel prices, which was as early as March.
This comes as the Centre on Monday announced that the government will remove the restrictions on state-run oil companies in selling auto fuels to bulk consumers and withdraw the 200-litre daily limit per vehicle.
