In a significant development, the average price of India’s crude oil imports has dropped below $70 per barrel, marking the first time this has occurred since the onset of the conflict in West Asia. This decline brings financial relief to fuel retailers but does not necessarily signal an immediate decrease in petrol and diesel prices for consumers. The price of the Indian crude basket has fallen to approximately $68.86 per barrel, a substantial reduction of over 50% from its peak when the conflict had caused a spike in global oil prices.
For state-owned fuel companies, the reduction in crude prices has been a boon, allowing them to recover from earlier financial losses experienced while maintaining stable retail prices amid the crisis. While oil marketing companies are now registering profits on petrol sales, they are still grappling with losses on diesel. According to officials, these companies are likely to prioritize recouping previous losses before any substantial price cuts are considered for consumers.
India’s heavy reliance on global energy markets is underscored by its import of over 88% of the crude oil it refines. The conflict had previously driven up crude prices and caused disruptions around the Strait of Hormuz, leading to increased costs for fuel companies. In response, the government had reduced excise duties on petrol and diesel to shield consumers from the full brunt of rising global energy prices and absorbed considerable financial burdens to prevent a sharp spike in retail fuel prices.
Oil prices began to retreat following diplomatic interventions by major powers, which eased concerns about further conflict escalation and helped restore energy shipments through critical routes. The petroleum ministry in India has attributed the country’s avoidance of fuel shortages to its diversified oil supply sources, robust import infrastructure, and strategic reserves. Despite the current lower crude costs, officials anticipate that retail fuel prices will likely remain steady in the near term.