Fuel price cut unlikely soon despite fall in global crude oil prices: Hardeep Singh Puri

A cut in petrol and diesel prices may not be immediate despite the recent decline in global crude oil prices, Union Minister for Petroleum and Natural Gas Hardeep Singh Puri indicated on Thursday (July 2). On whether there would be a reduction in retail fuel prices, Puri said this would become a "legitimate question" if international crude oil prices remained low over the next few weeks.

Storage over price cuts

Puri also said India should use the current phase of lower oil prices to strengthen its energy security by expanding crude and fuel storage capacity while stepping up engagement with bilateral partners, reported Reuters.

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The country's crude stocks at ports, terminals, refineries and strategic petroleum reserves are enough to meet demand for 76 to 80 days, the minister said, adding that New Delhi should build larger reserves to prepare for future disruptions.

"Maybe that's one of the lessons we've learned". We have learned the lesson and we will try to increase storage," stated Puri in reference to the crisis in the Gulf region.

Why prices haven't fallen

Crude oil prices started falling only in the second half of June after the US and Iran reached an agreement to end the conflict. However, oil marketing companies are still refining crude purchased when prices were significantly higher during the West Asia crisis.

Oil marketing companies incurred losses of Rs 74,781 crore from selling petrol, diesel and LPG below cost for the period up to June 30, when global crude prices had spiked following the conflict in West Asia, the minister said.

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International crude prices have since eased, but companies are currently processing crude bought at the peak of the crisis, Puri told reporters.

He explained that oil companies typically purchase crude around two months in advance. As a result, the crude now being refined was largely procured in April or early May, when international prices were considerably higher.

Earlier assurance

Last month, Puri said the rise in petrol and diesel prices in India had remained limited despite sharp volatility in global crude oil markets.

"If we look at the situation in real terms, there has been no increase in petrol and diesel prices in the country," Puri said while addressing a press conference during his visit to Sonbhadra as part of the Centre's campaign marking 12 years of the Narendra Modi government.

India's price record

Responding to a question on whether domestic fuel prices would be reduced in view of softer international crude prices, Puri said, "There are 193 countries in the United Nations and only Japan has seen a lower increase in petroleum prices than India."

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He added that the overall increase in petrol and diesel prices had been limited to Rs 7.60 and said that, compared with the prices prevailing during the Russia-Ukraine conflict that began in 2022, "there has actually been no increase."

(With agency inputs)