Crude oil prices have been on a downward trend for months now. Since March, crude oil has seen a price drop of about 19%, bringing it down to around $68 per barrel from $84 per barrel. However, despite this significant decrease, the prices of petrol and diesel at the pumps have not budged. Indian consumers are left wondering why they are not seeing any relief in fuel prices.
Oil Companies’ Profits on the Rise
One of the key reasons for the lack of reduction in fuel prices is the rising profit margins for oil companies. Even though crude oil prices have dropped, oil companies have not passed on these benefits to consumers. Instead, they have increased their profit margins. According to reports, since March, oil companies have made an additional profit of ₹15 per liter on petrol and ₹12 per liter on diesel.
This has allowed oil companies to recover from the losses they incurred previously. In fact, the three major oil companies in India—Indian Oil, Bharat Petroleum, and Hindustan Petroleum—have collectively made profits of around ₹81,000 crore in the financial year 2023-24. Indian Oil alone earned ₹39,619 crore, Bharat Petroleum ₹26,673 crore, and Hindustan Petroleum ₹14,694 crore.
Why Haven’t Petrol and Diesel Prices Dropped?
Even though crude oil prices have fallen by 19% over the past few months, petrol and diesel prices have remained the same. There are several reasons behind this. For one, oil companies were facing financial losses for some time and are using the opportunity to recover and stabilize their profits.
Moreover, the government has set a crude oil price target of $85 per barrel. Currently, prices are below this target, which could provide some room for reducing fuel prices. However, this decision has not been made yet, as companies focus on profitability.
Will Fuel Prices Go Down Soon?
There is some hope that petrol and diesel prices may be reduced in the near future, particularly with state assembly elections and festive seasons approaching. According to reports, the government is considering a reduction in fuel prices to provide relief to consumers. If the decision is made, fuel prices could drop by ₹2 to ₹3 per liter.
The upcoming festivals and elections could put pressure on the government to offer some relief at the pumps, but it remains to be seen when this decision will be made.
The Impact of Crude Oil Prices
India is a large importer of crude oil, and any fluctuations in global prices have a direct impact on the country’s economy. A $1 drop in crude oil prices results in a saving of around ₹13,000 crore on India’s annual import bill. With crude oil prices now at around $68 per barrel, the country is saving significantly on its imports.
Despite these savings, consumers are still waiting for those benefits to be reflected in petrol and diesel prices. According to rating agencies like ICRA, if crude oil prices remain stable, fuel prices could be reduced by ₹2 to ₹3 per liter in the coming days.
The Most Expensive Fuel in India
Currently, Andhra Pradesh holds the title for the highest petrol and diesel prices in the country. Petrol costs ₹108.46 per liter, and diesel is priced at ₹96 per liter in the state.
In summary, while crude oil prices have decreased, Indian consumers are still waiting for petrol and diesel prices to follow suit. Oil companies are currently enjoying higher profits, but with upcoming elections and festivals, there is hope that the government will step in and provide some much-needed relief at the pumps.
