OMCs may review petrol, diesel prices in 2-3 months if crude remains low, says Minister Puri | Today’s news
New Delhi: Union Petroleum and Natural Gas Minister Hardeep Singh Puri on Thursday said state-run oil marketing companies (OMCs) may review petrol and diesel prices in the next two to three months if international oil prices remain subdued and stable at current levels.
At a press conference, Puri said OMCs absorbed much of the rise in global oil prices caused by the conflict in West Asia, instead of passing the full burden on to consumers and curbing the rise in retail fuel prices.
“If the question is, when are you going to cut prices? Well, they (OMCs) still have inventories that were bought at a higher price with higher insurance, higher freight rates. If it (low oil prices) continues for the next two, three months, then that would be a legitimate question,” Puri said, responding to questions on whether there will be a cut in fuel prices.
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International oil prices fell sharply after Iran and the US signed a memorandum of understanding on June 17 to de-escalate the conflict. Brent crude touched a four-year low of around $70.37 a barrel on Thursday, down from a four-year high of $126.41 on April 30. At 19:55, the September Brent contract was trading at $70.78 a barrel, down 1.09% from the previous close.
Defending the government’s decision not to cut retail fuel prices immediately, Puri said petrol prices rose by around 20% in developed countries and 35% in India’s neighboring countries during the recent spike in oil prices, compared to just 5.58% in India.
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He attributed the difference to the Centre’s decision to cut excise duty on petrol and diesel three times – in November 2021, May 2022 and March 10, 2026 – instead of passing on the full hike in oil prices to consumers.
“The price has never increased … Instead of passing the increase on to the consumer, it’s the budget and our system that absorbs the increase,” he said.
The minister’s comments come a day after private refiner Nayara Energy cut petrol prices ₹5 liter and diesel prices according to ₹3 liters. Puri said the cancellation has brought retail prices of Nayara roughly in line with those at state-owned OMC outlets.
Nayara was the first fuel retailer in the country to raise prices during the West Asian conflict. The price of petrol in Gurugram is now for ₹102.76 a liter at Nayara outlets while diesel costs ₹95.58 liters, according to petrol pump dealers. At Indian Oil Corp. outlets. Ltd (IOCL) in Delhi, the price of petrol is fixed at ₹102.12 liters and diesel at ₹95.20 per litre.
Read also | Indian refineries are bracing for oil volatility after fresh Iran-US strikes
Puri said the OMCs raised petrol and diesel prices for the first time on May 15 after keeping rates flat during the first two months of the conflict. During the four revisions, petrol and diesel prices have cumulatively increased by approx ₹7.5 liters.
However, the policy of dampening consumers is costing state-run retailers.
Puri said the cumulative unutilized amounts are around ₹2.19 trillion inclusive ₹30,720 crores of insufficient revenues from the sale of liquefied petroleum gas (LPG) incurred before the war in Iran. OMC’s losses at the end of June continued to be ₹74,781 million crowns.
Under-recovery refers to the notional loss incurred by oil marketing companies when they sell fuel domestically below international prices. It is calculated based on the 15-day moving average of international oil prices.
Puri also said that India maintained uninterrupted fuel supplies during the conflict. “Over the past four months, we’ve been successful without any drying up or closings in any of our 107,000 retail stores.”
