New Delhi: Petroleum Secretary Pankaj Jain on Thursday indicated that oil marketing companies may meet to take a call on price cuts if crude oil prices remain lower for longer. The Centre slashed petrol and diesel rates by Rs 2 per litre in March 2024, ahead of the Lok Sabha polls.
Expectations of a potential price cut have gained momentum since Brent crude oil prices plunged below $70 per barrel for the first time since December 2021. The price of India’s crude oil basket averaged $72 per barrel in August.
Prior to the price cuts in March, petrol and diesel prices were frozen by the Centre to prevent any harm to the consumer’s pocket from elevated fuel prices as crude oil prices touched $100 per barrel across the world after the onset of the Russia-Ukraine War.
The Centre also introduced the windfall tax on domestically produced crude oil to ensure domestic availability of fuel and charge companies that were trying to capitalise on the availability of cheaper Russian crude oil by exporting it abroad.
India’s oil marketing companies ked by BPCL, IOCL and HPCL have earned robust profits for multiple quarters until Q1FY25 when the government kept crude oil prices unchanged. OMCs recovered the losses incurred for selling petrol and diesel at fixed rates when crude oil prices declined globally.
Global fuel demand outlook
Global fuel demand is expected to witness a decline amid forecasts of a global slowdown, led by China. OPEC+ deferred production cuts to wait and watch demand until November 2024.The US Energy Information Administration stated that US fuel demand is expected to slow down in 2024, even as it remained steady at 20.3 million barrels per day.
The oil ministry is also in discussions with the finance ministry over windfall taxes, the ET reported, citing Jain. WIndfall tax may be removed if crude oil prices remain low, he added.
The Centre may call a meeting of state-owned oil marketing companies in crude oil prices remain lower for longer, said petroleum secretary Pankaj Jain. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
