For the first time since the conflict in West Asia erupted, India’s average crude oil import price has slipped below the $70 mark per barrel. This development has brought some relief to fuel retailers, though it may not translate into immediate price cuts for petrol and diesel consumers. The Indian crude basket price has now reached approximately $68.86 per barrel, marking a significant decline of over 50% from its peak when global oil prices surged due to the conflict.
This price drop has been beneficial for state-owned oil companies, which have been able to recuperate some of their previous losses incurred as they maintained stable retail prices throughout the crisis. While these companies are now seeing profits in petrol sales, they continue to incur losses on diesel. According to officials, before passing on any savings to consumers, these companies are likely to prioritize recovering their earlier financial setbacks.
India’s heavy reliance on global energy markets is underscored by its importation of over 88% of the crude oil it processes. The conflict had initially driven up crude prices and caused disruptions in the Strait of Hormuz, escalating costs for fuel companies. In response to the pressure on consumers, the Indian government had previously cut excise duties on petrol and diesel and absorbed substantial costs to prevent drastic price increases during the global energy crisis.
The decline in oil prices can be attributed to successful diplomatic engagements among major world powers, which helped allay fears of further conflict escalation, thereby stabilizing energy shipments through critical routes. The Indian petroleum ministry highlighted the country’s ability to avoid fuel shortages, thanks to diversified oil supply chains, improved import infrastructure, and strategic reserves. Despite the lower crude costs, it is anticipated that retail fuel prices will remain stable in the short term.