Global crude oil prices down by 12% since March, will oil companies slash petrol-diesel prices?

Petrol and diesel prices across India could see a reduction of 2-3 rupees per liter, thanks to reduction in crude oil prices. Since March, global crude oil prices have decreased by around 12%, significantly improving the profit margins of oil marketing and refining companies. This price drop provides an opportunity for these companies to lower fuel prices, benefiting consumers across the country.

Crude Oil Price Trends

A report by the rating agency ICRA highlights that the average price of crude oil imported to India has dropped to $74 per barrel this month. Back in March, crude oil prices hovered around $83-84 per barrel. This substantial decline in global crude prices is a key factor in the increased profit margins for oil companies, offering room to pass on the benefit to consumers through a price cut.

The last time a similar reduction in petrol and diesel prices took place was in March, when fuel prices were lowered by 2 rupees per liter. With crude oil prices now even lower than they were then, there is a strong case for oil marketing companies to introduce another reduction in the near future. If implemented, it would provide relief to millions of consumers who rely on petrol and diesel for transportation and other essential activities.

Earnings of oil marketing companies have increased

ICRA Senior Vice President Girish Kumar Kadam said, 'Between March-September, the earnings of oil marketing companies have increased by 15 rupees on petrol and 12 rupees per liter on diesel. In such a situation, if the prices of crude oil remain stable, then the prices can be reduced by 2-3 rupees per liter.'

The most expensive petrol in the country is in Andhra Pradesh. Here a liter of petrol is Rs 108.46 per liter. After this, it is Rs 107 per liter in Kerala, Rs 106 per liter in Madhya Pradesh and Rs 105 per liter in Bihar. Whereas, the price of diesel in Andhra Pradesh is Rs 96 per liter.

India imports 85% of its crude oil requirement

We buy more than 85% of our crude oil requirement from abroad. We have to pay its price in dollars. In such a situation, due to increase in the price of crude oil and strengthening of dollar, petrol and diesel start becoming expensive. Crude oil comes in barrels. One barrel means 159 liters of crude oil.

Till June 2010, the government used to determine the price of petrol and it was changed every 15 days. After 26 June 2010, the government left the determination of petrol prices to the oil companies.

Similarly, till October 2014, the price of diesel was also determined by the government. From 19 October 2014, the government handed over this work to the oil companies. Currently, oil companies determine the price of petrol and diesel daily keeping in mind the price of crude oil in the international market, exchange rate, tax, transportation cost of petrol and diesel and many other things.