India’s fuel prices could see a downward revision as global crude oil remains stable, raising expectations of relief for consumers. Union Petroleum Minister indicated that if current crude price trends persist, a reduction in petrol and diesel rates is a strong possibility. The statement, made on Friday, has heightened anticipation among citizens and industry stakeholders, especially after a prolonged freeze on fuel prices. With Brent crude trading in the $70-75 per barrel range, the likelihood of a price cut is gaining momentum.
The last revision in retail fuel prices was a Rs 2 per litre cut on March 14, just before the general elections. Prior to this, fuel prices had remained unchanged since May 22, 2022, when the Centre implemented an excise duty reduction. The two rounds of excise duty cuts—first in November 2021 and then in May 2022—had led to a total reduction of Rs 13 per litre on petrol and Rs 16 per litre on diesel. Additionally, several BJP-ruled states had slashed VAT rates to cushion consumers against the steep rise in global crude prices following the outbreak of the Russia-Ukraine war. Despite these interventions, fuel prices remained static for almost two years, sparking debates about the need for a market-driven approach.
Industry observers note that while global crude prices have softened, state-run fuel retailers have not yet passed on the benefits to consumers. Unlike private retailers, which have adjusted their pricing based on market fluctuations, public sector oil marketing companies (OMCs) have maintained prices, citing the need to recover past losses. These losses, particularly on domestic LPG sales, have been substantial despite the budgetary support allocated for the Ujjwala scheme. The reluctance to reduce prices has drawn criticism, with many arguing that the benefits of lower crude should be extended to the public. However, oil companies have defended their stance, emphasising that previous under-recoveries need to be offset before any price reduction can be considered.
As economic conditions remain volatile, fuel price reductions could provide much-needed relief, not just for individual consumers but also for industries reliant on transportation. Inflationary pressures have already strained household budgets, and a reduction in fuel costs could alleviate some of the financial burdens. Whether the government and state-run oil companies will act on these expectations remains to be seen. For now, all eyes are on global crude trends and policy decisions that could determine the trajectory of India’s fuel pricing in the coming months.
