OMCs may review petrol, diesel prices in 2-3 months if crude stays low, says Minister Puri

New Delhi: Union petroleum and natural gas minister Hardeep Singh Puri on Thursday indicated that state-run oil marketing companies (OMCs) could review petrol and diesel prices in the next two to three months if international crude prices remain subdued and stable at current levels.

Addressing a press briefing, Puri said OMCs had absorbed much of the surge in global crude prices driven by the conflict in West Asia instead of passing the full burden on to consumers, limiting the increase in retail fuel prices.

“If the question is, when will you break prices down? Well, they (OMCs) are still carrying the stock which was bought at a higher price with higher insurance, higher freight rates. If this (low crude prices) persists next two, three months, then that would be a legitimate question,” Puri said, responding to queries on whether fuel prices would be cut.

International crude prices have eased sharply since Iran and the US signed a memorandum of understanding on 17 June 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 30 April. At 7.55 pm, 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 lower retail fuel prices immediately, Puri said petrol prices rose by around 20% in developed countries and about 35% in India's neighbouring countries during the recent oil price spike, compared with just 5.58% in India.

He attributed the difference to the Centre's decision to cut excise duty on petrol and diesel on three occasions—November 2021, May 2022 and 10 March 2026—instead of passing the full increase in crude prices on to consumers.

"The price never went up... Instead of passing the increase on to the consumer, it is the budget and our system which absorbs that increase," he said.

The minister's comments come a day after private refiner Nayara Energy cut petrol prices by ₹5 a litre and diesel prices by ₹3 a litre. Puri said the rollback had brought Nayara's retail prices broadly in line with those at state-run OMC outlets.

Nayara was the first fuel retailer in the country to raise prices during the West Asia conflict. In Gurugram, petrol is now priced at ₹102.76 a litre at Nayara outlets, while diesel costs ₹95.58 a litre, according to petrol pump dealers. At Indian Oil Corp. Ltd (IOCL) outlets in Delhi, petrol is priced at ₹102.12 a litre and diesel at ₹95.20 a litre.

Puri said OMCs raised petrol and diesel prices for the first time on 15 May after holding rates steady during the first two months of the conflict. Over four revisions, petrol and diesel prices were cumulatively increased by around ₹7.5 a litre.

The policy of cushioning consumers has, however, come at a cost for the state-run retailers.

Puri said cumulative under-recoveries stood at around ₹2.19 trillion, including ₹30,720 crore of under-recoveries on sales of liquified petroleum gas (LPG) incurred before the Iran war. Further, the losses of the OMCs at the end of June stood at ₹74,781 crore.

Under-recovery refers to the notional loss incurred by oil marketing companies when they sell fuel in the domestic market below international prices. It is calculated on the basis of the 15-day rolling average of international crude prices.

Puri also said India maintained uninterrupted fuel supplies throughout the conflict. “We did well without any dry-out or closure at any of the 107,000 retail outlets during the last four months.”