Exclusive: Retail fuel price cut possible if crude supply stays stable, says Hardeep Puri

The fuel price freeze began on April 6, 2022, to keep inflation in check

State-run oil marketing companies may consider fuel retail price cuts if crude supply is not disrupted any more, Hardeep Singh Puri, Union Minister of Petroleum and Natural Gas, told Moneycontrol in an exclusive interview.

"If the anxiety factor on the Red Sea is not there if the supply is not disrupted because of something else, surely it's something which is legitimately to be considered. But the decisions on that are to be taken by the oil marketing companies," Puri said.

According to energy experts, crude oil prices in the short term would be driven by lower-than-expected global demand and weak economic growth around the world, offsetting the impact of geopolitical tensions.

Improved profitability on the back of moderating oil prices has raised expectations of a revision in retail fuel prices, which has been kept unchanged since May 2022.

In 2022, OMCs froze the retail fuel prices despite soaring crude oil to help keep inflation in check, which dented their bottom line. However, oil prices moderated from the record high witnessed in September 2023, helping the companies to recoup losses and return to profitability.

"We expect the OMCs to report record-high EBITDA in FY24, given strong gross refining margins (GRMs) and steady marketing profit after large retail losses in FY23," ratings agency Fitch said in a report last week.

However, according to a recent media report, state-owned fuel retailers are losing close to Rs 3 per litre on selling diesel while the profit on petrol has trimmed due to recent firming up in international oil prices, industry officials said detailing reasons for continuing to hold retail prices.