Value of worldwide crude oil – the uncooked materials for making petrol and diesel – dropped to a three-year low earlier than marginally recovering however a revision in home petrol and diesel charges is probably going provided that decrease charges are sustained, business sources and officers stated.
International oil benchmark Brent crude futures fell under USD 70 per barrel on Tuesday – the primary time since December 2021 – however gained thereafter after Hurricane Francine hit crude provide within the Gulf of Mexico. Brent rose above USD 71 a barrel on Thursday whereas West Texas Intermediate superior to commerce close to USD 68.
Petrol and diesel costs – which have been on a freeze for over two years now barring a pre-election discount earlier this yr – can be revised if the declining pattern sustains, they stated.
Oil Secretary Pankaj Jain talking to reporters on the sidelines of an occasion right here, stated the oil firms can be taking acceptable choices on lowering gas costs if worldwide oil costs have been to settle decrease on a sustained foundation.
Trade sources stated the three state-owned gas retailers are making good income on petrol and diesel however need the pattern to proceed earlier than deciding on a revision.
“They dont desire a scenario the place they reduce costs and are confronted with a scenario have been worldwide costs rise,” an official defined.
Brokerage Emkay GLobal Monetary Companies in a be aware stated it expects Indian Oil Company (IOC), Bharat Petroleum Company Ltd (BPCL) and Hindustan Petroleum Company Ltd (HPCL) to chop petrol and diesel costs earlier than elections in Maharashtra.
“We imagine there are expectations of a retail worth reduce in auto-fuels for oil advertising firms (OMCs) amid the upcoming state elections. Whereas we don’t rule out the identical, the mannequin code of conduct for J&Ok and Haryana is on for a month. There may very well be a reduce solely towards Diwali and earlier than Maharashtra election’s mannequin code of conduct, which may very well be Rs 2 per litre every for petrol and diesel and probably coupled with an equal enhance in excise obligation,” it stated.
Nonetheless, in the course of the subsequent month, OMCs can earn supernormal advertising margins, overlaying LPG under-recoveries and stock losses to a big extent.
“We estimate implied July-September gross advertising margins at Rs 9.7/8 per liter for petrol/diesel vs Rs 4.7/3.8 in Q1 (April-June) and a normative vary of Rs 3.5-4 every,” it stated.
India imports 85 per cent of its oil wants and its gas pricing is listed to worldwide charges.
Whereas the OMCs have pricing freedom, they’ve since late 2021 not revised costs consistent with price. They frooze charges in April 2022 solely to chop costs by Rs 2 per litre every simply earlier than common elections earlier than once more freezing the charges. Petrol prices Rs 94.72 per litre within the nationwide capital and diesel comes for Rs 87.62 a litre.
