The state-run oil marketing companies (OMCs) have not reduced retail petrol and diesel prices despite sinking crude oil prices on account of high volatility in crude, a top oil ministry official told reporters on condition of anonymity.
Amid weakened demand and relatively higher oil supply in the market, crude oil prices plummeted to the lowest in the month since December 2021. Benchmark Brent is currently trading around $74 per barrel, compared to around $69 a barrel on September 10 — the lowest in three years.
“They (OMCs) are looking at the difference (in crude prices) from what they were a week back to today. The sheer volatility that we are looking in prices. Last night, we heard 50 basis point cut by the Fed. People are looking at new data like what is China’s PMI looking like, how is China’s purchase of crude, storage of crude, etc,” said the official.
Global oil prices have been volatile this year, breaching $90 per barrel in April due to geopolitical tensions in the Middle East, before plummeting to around $70- $75 a barrel currently due to demand concerns from the world’s largest importer, China. At home, retail fuel prices are determined by the OMCs based on international oil prices as India is dependent on imports for around 87 percent of its crude requirements.
Meanwhile, the Indian refiners were hit in the last quarter (Q1FY25) with their net profits declining sharply from the last year due to weak refining margins. The official added that OMCs have to consider all the aspects before deciding on a price cut.
“Today, you have a situation where cracks are negative on petrol. This means that it is cheaper to buy petrol than to buy crude… Any decision which the OMC take, they look at the entire thing,” the official said.
Despite weak refining margins, the state-run OMCs have still managed to book decent profits recently, owing to declining crude oil prices coupled with freeze on retail fuel prices for Indian consumers. The companies had last reduced the prices of petrol and diesel across the country in March ahead of the Lok Sabha elections by Rs 2 per litre.
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