The Crossbill News Desk
Despite a sharp decline in global crude oil prices over the past few weeks, the Centre has indicated that Indian consumers should not expect an immediate reduction in petrol and diesel prices.
Union petroleum minister Hardeep Puri on Friday (July 3) suggested that the recent fall in international prices may instead be used to offset the financial losses suffered by state-owned oil marketing companies during the West Asia conflict.
According to The Economic Times, Puri said lowering consumer prices would become a legitimate issue if global oil prices continue to stay low over a sustained period.
The minister explained that the fuel currently being sold in India is linked to crude supplies purchased when international prices were significantly higher. He added that oil marketing companies still had substantial losses to recover because they did not immediately pass on the increase in crude prices to consumers during the conflict in West Asia.
“Today the crude oil that is sold at $70 per barrel or below will arrive much later,” he said, The Hindu reported.
Data from the Petroleum Planning and Analysis Cell (PPAC) show that the average cost of India's crude basket stood at $86.31 per barrel until June 24, down sharply from $114.48 per barrel in April.
However, prices continued to ease thereafter, with the average for the entire month of June falling further to $83.22 per barrel and dropping to $67.72 per barrel during the first two days of July.
The recent reduction in global prices has already translated into lower rates for commercial LPG, with oil marketing companies cutting the price of commercial cylinders by around Rs 180 on July 1. Commercial LPG prices had previously absorbed much of the impact of rising energy costs, increasing by more than Rs 1,300 since March.
Crude oil prices had surged above $110 per barrel during the US-Israel conflict with Iran, although markets remained volatile throughout the period.
According to The Hindu, Indian refiners typically finalise crude purchase agreements nearly two months in advance, suggesting that any benefit from the recent fall in prices may not be reflected in retail fuel prices before September, if at all.
Beginning May 15, state-run oil companies implemented multiple rounds of fuel price increases. By early June, petrol prices had risen by about 7.8% compared to pre-war levels, while diesel prices were approximately 8.6% higher.
Puri said the overall “under-recoveries” of oil marketers are even higher, at over Rs 1.18 lakh crore, including losses of Rs 19,905 crore on petrol sales, approximately Rs 1.45 lakh crore on diesel sales and Rs 24,148 crore on LPG.
The losses were, the minister said, around Rs 75,000 crore in the April to June quarter of Financial Year 2026-27 – the war period, The Times of India reported.
The minister also indicated that the government is considering strengthening the country's energy security by building reserves while prices remain relatively low. Responding to questions on crude inventories, he said stocks currently cover only around 76 to 80 days of supply, including oil in pipelines and strategic reserves.
“Stocking while prices are low, increasing storage space and intensifying outreach to bilateral partners – all that will go hand in hand,” Puri said.
The remarks mark a more cautious stance from the government after earlier indications from Puri in June that crude prices were likely to moderate, even as uncertainty remains over whether lower international prices will eventually translate into relief for Indian consumers.
Union petroleum minister Hardeep Puri on Friday (July 3) suggested that the recent fall in international prices may instead be used to offset the financial losses suffered by state-owned oil marketing companies during the West Asia conflict.
According to The Economic Times, Puri said lowering consumer prices would become a legitimate issue if global oil prices continue to stay low over a sustained period.
The minister explained that the fuel currently being sold in India is linked to crude supplies purchased when international prices were significantly higher. He added that oil marketing companies still had substantial losses to recover because they did not immediately pass on the increase in crude prices to consumers during the conflict in West Asia.
“Today the crude oil that is sold at $70 per barrel or below will arrive much later,” he said, The Hindu reported.
Data from the Petroleum Planning and Analysis Cell (PPAC) show that the average cost of India's crude basket stood at $86.31 per barrel until June 24, down sharply from $114.48 per barrel in April.
However, prices continued to ease thereafter, with the average for the entire month of June falling further to $83.22 per barrel and dropping to $67.72 per barrel during the first two days of July.
The recent reduction in global prices has already translated into lower rates for commercial LPG, with oil marketing companies cutting the price of commercial cylinders by around Rs 180 on July 1. Commercial LPG prices had previously absorbed much of the impact of rising energy costs, increasing by more than Rs 1,300 since March.
Crude oil prices had surged above $110 per barrel during the US-Israel conflict with Iran, although markets remained volatile throughout the period.
According to The Hindu, Indian refiners typically finalise crude purchase agreements nearly two months in advance, suggesting that any benefit from the recent fall in prices may not be reflected in retail fuel prices before September, if at all.
Beginning May 15, state-run oil companies implemented multiple rounds of fuel price increases. By early June, petrol prices had risen by about 7.8% compared to pre-war levels, while diesel prices were approximately 8.6% higher.
Puri said the overall “under-recoveries” of oil marketers are even higher, at over Rs 1.18 lakh crore, including losses of Rs 19,905 crore on petrol sales, approximately Rs 1.45 lakh crore on diesel sales and Rs 24,148 crore on LPG.
The losses were, the minister said, around Rs 75,000 crore in the April to June quarter of Financial Year 2026-27 – the war period, The Times of India reported.
The minister also indicated that the government is considering strengthening the country's energy security by building reserves while prices remain relatively low. Responding to questions on crude inventories, he said stocks currently cover only around 76 to 80 days of supply, including oil in pipelines and strategic reserves.
“Stocking while prices are low, increasing storage space and intensifying outreach to bilateral partners – all that will go hand in hand,” Puri said.
The remarks mark a more cautious stance from the government after earlier indications from Puri in June that crude prices were likely to moderate, even as uncertainty remains over whether lower international prices will eventually translate into relief for Indian consumers.
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