Why falling global oil prices won’t lower petrol, diesel prices in India

Regardless of falling global oil prices due to banking turmoil in the US, there is hardly any chance of a fall in petrol and diesel prices in India. It would take longer for the oil marketing companies to recover their losses accumulated due to high crude prices earlier.

Constant domestic fuel prices amid rising prices of crude oil at the global level in past quarters resulted in huge losses to oil companies. The recent fall in global fuel prices is a chance for companies to recover their accumulated losses, reported CNBC-TV18, citing an anonymous government source.

Also Read: Retail inflation dips marginally to 6.44% in Feb on easing prices of food, fuel

Notably, the three fuel retailers, Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL), haven’t revised petrol and diesel prices in line with the cost for the past 15 months till January this year, reported PTI citing a report.

The three companies also posted a net loss of 21,201.18 crore during April-September despite accounting for 22,000 crore announced but not paid LPG subsidy.

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The three companies, which control 80% of the fuel supply in India haven’t changed petrol and diesel prices since April 6, 2022, despite input crude oil prices rising from USD 102.97 per barrel in April to USD 116.01 in June and falling to USD 78.09 in January 2023.

Also Read: Explained: Why India’s fuel demand is rising?

Holding retail prices during higher input costs resulted in swollen net earnings loss of these three companies. All these companies posted a combined net loss of 21,201.18 crore during April-September despite accounting for 22,000 crore announced but not paid LPG subsidy, reported PTI.

Global oil prices reached a 15-months low amid fear of a banking crisis

Last week, global oil prices reached their 15-month lowest level after the market went haywire due to the fear of a banking crisis. Following the banking chaos due to Silicon Valley Bank, First Republic, and Credit Suisse turmoil, brent crude fell nearly by 12% during the last week. The fuel recorded its biggest ever weekly fall since December, reported Reuters.

Given the current market conditions, experts are hoping for persistent volatility in the global crude oil market. The oil price gains may be limited in the near term, as OPEC has estimated this week of a modest surplus in the second quarter. The International Energy Agency on Wednesday said that the market was already in surplus on Russian output.

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