Will Petrol And Diesel Prices Finally Fall? Minister Hardeep Puri Offers A Major Hint

For millions of motorists keeping an eye on fuel prices, the next few months could prove important. Union Petroleum Minister Hardeep Singh Puri on Thursday suggested that petrol and diesel prices may be reviewed if international crude oil prices continue to remain at current levels, though he made it clear that any immediate cut is unlikely because refiners are still working with costlier crude purchased during the recent West Asia conflict.

Why Consumers Haven't Seen Cheaper Fuel Yet

Even though global crude prices have cooled in recent weeks, that decline has not yet translated into lower prices at petrol pumps in India. The reason, Puri explained, lies in how the oil business operates.

Refineries do not process crude bought yesterday. They work with supplies purchased weeks earlier, meaning the fuel being refined today comes from crude acquired when prices had surged during the conflict in West Asia.

"We are using the crude petroleum stock today that we had bought two months ago (at a price that existed two months ago). If this (decline) continues for 2-3 months, we will see. But it is a hypothetical situation," he said.

The minister added that a discussion on reducing petrol and diesel prices would become more relevant if crude continues to trade at lower levels over the coming weeks.

Offering the clearest indication yet of possible relief, Puri said, "Today I can tell you seriously. If audience asks when will fuel prices come down further, I would say if this trend (low crude prices) continues, there is reasonable expectation (of a fuel price cut)."

Oil Companies Absorbed The Spike Instead Of Passing It On

The government also disclosed the financial impact of keeping retail fuel prices largely stable during the recent surge in crude oil.

According to Puri, state-run oil marketing companies together incurred losses of Rs 74,781 crore up to June 30 after selling petrol, diesel and LPG below cost while global crude prices remained elevated.

At one stage during the Iran conflict, international crude crossed $110 per barrel. Despite the sharp jump, public sector fuel retailers did not fully transfer the additional burden to consumers.

The minister argued that India's response compared favourably with several other countries.

"The petrol price increase in developed world was around 20% and around 35% in India's neighboring countries, but in India, the increase in petrol price was just 5.58% during the crisis."

He also highlighted that fuel supplies remained uninterrupted across the country despite the challenging conditions.

"We did well without any dryout or closure at any of the 1,07,000 retail outlets during last four months (February 28th till the end of June)," Puri said.

Why Nayara Energy Could Cut Prices Before Others

The recent price reduction announced by private retailer Nayara Energy has raised hopes that more companies may follow. From July 1, Nayara lowered petrol prices by Rs 5 per litre and diesel by Rs 3 per litre across its retail outlets.

Puri, however, said the move should be viewed in context.

"Nayara has reduced the price of Petrol because it had increased it by Rs 5 per litre during the crisis period. They have only taken back that price increase now. They have only reduced that price... while the Oil Marketing Companies had not increased the price at that time," he said.

Unlike public sector retailers, Nayara had raised prices when crude became expensive, giving it the flexibility to roll back those increases after international markets cooled.

What Needs To Happen Before Fuel Prices Are Reduced

Global oil prices began easing only in the second half of June after tensions in West Asia subsided and the United States and Iran reached an agreement to end the conflict. Even so, refiners generally purchase crude around two months in advance, meaning the benefit of lower international prices takes time to filter through the system.

Petrol and diesel prices were last reduced by Rs 2 per litre on March 14 last year, ahead of the Lok Sabha elections. Before that, retail prices had largely remained unchanged since May 2022 after the Centre reduced excise duty on fuels, with several BJP-ruled states also lowering VAT.

Although Brent crude has stayed around the $70-75 per barrel range for some time, state-run fuel retailers have not passed on the benefit to consumers. The government has also cited continuing losses on domestic LPG sales, including supplies made under the Ujjwala scheme.

For now, the minister's message is straightforward. If crude prices remain stable over the next two to three months, the possibility of a reduction in petrol and diesel prices could become much stronger, but any decision will depend on how global markets behave in the weeks ahead.