No immediate relief; petrol, diesel prices may be cut only after lower crude prices persist: Govt

Petrol and diesel prices are unlikely to be reduced immediately despite international crude oil falling to a four-month low, as state-run refiners are still processing expensive crude purchased during the peak of the West Asia conflict, Petroleum and Natural Gas Minister Hardeep Singh Puri said on Thursday.

The minister indicated that any reduction in retail fuel prices would depend on crude oil remaining at current lower levels for a sustained period, as the benefits of cheaper imports take time to filter through the supply chain.

International crude prices have fallen from around USD 119 a barrel at the height of the conflict to about USD 70 after the United States and Iran signed an interim peace agreement, easing concerns over supplies through the Strait of Hormuz.

However, Puri said Indian refiners were currently processing crude purchased two to two-and-a-half months ago, when oil prices, freight charges and insurance costs were significantly higher.

"That crude would have been obtained two months back when prices were high, cost of insurance was high, cost of freight was high," he said. "Crude priced at current lower rates will arrive later."

Asked whether consumers could expect a reduction in petrol and diesel prices, Puri said it would be a "legitimate" step if international crude remained at current levels.

"If it remains like this, it is a legitimate thing," he said.

Petrol and diesel prices were increased by about Rs 7.50 per litre each in the second half of May, more than two months after the outbreak of the West Asia conflict and by less than the increase in international fuel costs.

According to Puri, the delayed and partial pass-through of higher crude prices meant Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) absorbed a substantial portion of the increase.

He said the three state-run fuel retailers together incurred losses of Rs 74,781 crore on the sale of petrol, diesel and subsidised LPG. The figure includes losses on retail fuel sales during the four months following the outbreak of the conflict on 28 February as well as unrecovered LPG subsidies.

Responding to questions on Nayara Energy reducing petrol prices by Rs 5 per litre and diesel by Rs 3 per litre while state-owned firms have not followed suit, Puri said the private retailer was effectively reversing the price increases it had implemented earlier.

He said Nayara had matched the price hikes announced by public sector oil companies in May and had now brought its retail prices broadly back in line with those of state-owned retailers.

Puri also said India had successfully navigated the four-month disruption in energy supplies by diversifying crude imports across multiple regions and increasing LPG purchases from the United States.

He said the strategy ensured uninterrupted fuel availability across the country, even as some neighbouring countries resorted to rationing supplies.

"Every one of our refineries is stocked, every port, terminal, pipeline and depot is stocked. In all, we have stocks to cover the country's requirement for 76 to 80 days," he said.

The minister added that India would continue expanding its strategic storage capacity while strengthening energy partnerships with supplier nations to prepare for future disruptions.