Govt may cut petrol and diesel prices if global prices remain low: Petroleum Secretary

Secretary at the Ministry of Petroleum and Natural Gas, Pankaj Jain, said on Thursday that oil companies will consider cutting fuel prices if crude oil remains low for an extended period.

With the rise in fuel demand, India wants increased output from the Organisation of Petroleum Exporting Countries (OPEC), its allies, and Russia, the Oil Secretary added. India imports most of its oil from Russia, followed by Iraq and Saudi Arabia. According to a report by Reuters, India is the world's third-largest oil importer and imports over 80% of its oil from abroad.

Global crude oil prices

International crude oil prices hit a 33-month low on Tuesday, September 10. The benchmark crude futures sank below $70 a barrel for the first time since December 2021. This came after the Organisation of Petroleum Exporting Countries and its allies (OPEC+) cut the global oil demand forecast for 2024 and 2025.

OPEC in its monthly report on Tuesday stated that the oil demand in the world will rise by 2.03 million barrels per day (bpd) in 2024, slightly lower from last month's forecast for growth of 2.11 million bpd. Oil prices declined due to low global demand and expectations of oil oversupply with the Libya deal and group output. The report also said that the output fell in August due to unrest in Libya.

In the case of India, the state-run oil companies had previously cut oil prices by ₹2 per litre in March ahead of the announcement of the Lok Sabha elections date.

Windfall taxes

The Oil Ministry in also in talks with the Department of Revenue to make a decision on windfall taxes.The windfall tax was introduced in July 2022 and is revised in 15 days on the basis of international crude oil prices. This tax aims to control the extra profits of companies. Currently, windfall tax is managed the Department of Revenue.