Petrol, diesel prices may not fall despite 30% dip in global crude price

In a bid to recover past losses, the state-run oil companies may not immediately lift the six-month-long freeze on daily pricing of automobile fuel rates, despite a nearly 30 per cent decline in average international prices of petrol and diesel from the June peak, Livemint reported.

International oil prices have seen a sharp fall over the past four weeks. As a result, there was a reduction in prices of commercial liquefied petroleum gas, aviation turbine fuel (ATF) and taxes on windfall gains.

Oil marketing corporations (OMCs) in the public sector are still experiencing financial losses.

Because of the volatility in the world oil market, they cannot afford to immediately return to the system of daily fluctuations in the pump pricing of the automobile fuels.

According to official data, India’s average crude oil import price decreased by roughly 22 per cent to $90.71 per barrel in September from its peak of $116.01 in June. Product prices dropped even more drastically. While the average petrol price decreased by 37 per cent from $148.82 per barrel in June to $93.78 per barrel in September, the decrease for diesel is 28 per cent, from $170.92 per barrel in June to $123.36 per barrel in September.

The state-run OMCs including Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) are making about Rs 3-4 per litre margin on the sale of petrol, but the gains in diesel are still negligible, the livemint reported.

The government is likely to review the financial conditions of OMCs and take the necessary step accordingly.

India currently imports 85 per cent of crude it processes, making it the third-largest consumer of crude oil in the world, behind the United States and China.