When will petrol, diesel get cheaper? Petroleum Minister Hardeep Singh Puri answers amid cooling Brent price

With cooling of brent crude prices, all eyes are on petrol and diesel rates and next move of domestic retailers. Easing of tensions in West Asia and US and Iran's progress in peace talks towards a lasting accord can be attributed to recent softening in international energy markets. Union Minister of Petroleum and Natural Gas Hardeep Singh Puri on Thursday provided an answer to most concerning question on fuel price as masses await cuts in petrol and diesel prices.

While addressing a press briefing, Puri provided crucial context regarding the financial state of state-run Oil Marketing Companies (OMCs). Suggesting that any future adjustment in petrol and diesel prices depends on international prices, he said, “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."

Responding to further queries on fuel price revision, he added, "If crude prices remain at these levels for the next few weeks, cutting petrol and diesel prices will be a legitimate question that everybody asks. But what the situation will be then, it is not right for me to speculate."

According to Petroleum Minister, oil retailers incurred losses and under-recoveries of ₹74,781 crore in the June-end quarter by selling petrol, diesel, and LPG below cost, implying that the actual loss and under-recovery are both very high. Emphasizing that OMC's are still processing crude bought at the height of the war in West Asia he clarified that oil companies usually purchase crude oil at least two months in advance which serves as a raw material to produce fuel.

Petroleum Minister defends Centre's decision on fuel price revision

Hence, the fuel currently being processed and produced was essentially bought in April or early May, at the height of the oil price hikes. Defending the Centre's decision against immediate fuel price revision, Puri said petrol prices rose just by 5.58% in India while they increased 20% in developed countries and about 35% in India's neighbouring countries during the recent oil price spike.

Ever since the US and Iran signed 14-point memorandum of understanding on 17 June, Brent crude prices extended decline despite brief fluctuations during periods of renewed strikes. Amid oversupply, Brent crude touched a four-year low of around $70.37 a barrel on Thursday as flows through Strait of Hormuz resumed and returned to pre-war levels. On 3 July, Brent rebounded to trade around $72 a barrel. The global benchmark has been in contango and registered its worst quarter since 2020 after reaching its four-year high of $126.41 on 30 April.

Hardeep Singh Puri also addressed specific consumer apprehensions regarding surrounding E20 (20 per cent ethanol-blended) petrol and its impact on vehicular performance. Acknowledging decreased fuel efficiency under the E20 regime, he said, “Mileage, yes, it may drop a little, but mileage can drop a little because of various things.”

Further noting that the trade-offs are minimal compared to the performance advantages, he added "It is now well established that when you have ethanol, they use it in racing cars also. The acceleration increases, knocking improves."

(With agency inputs)