Fuel prices in Delhi stand at Rs 91.17 per litre whereas diesel is available at Rs 81.47. In Mumbai, petrol is available at Rs 97.57, while the cost of diesel is recorded at Rs 88.60 as per the data available on the Indian Oil Corporation’s website. However, fuel prices could go down if state-run oil marketing companies (OMC) decide to pass on the benefit of international fall in crude oil.
Over the last two weeks, global crude oil has sharply dropped by nearly 10 per cent. Therefore, OMCs have the chance to cut down the petrol and diesel prices, which are available at a high price in India.
Brent Crude oil is now retailing at $63.98 per barrel. Earlier, the price for Brent Crude oil per barrel was $70. Additionally, West Texas Intermediate (WTI) Crude or US crude has also come down to $60.94 per barrel.
Sriram Iyer (a Sr. Research Analyst) at Reliance Securities said “the international oil prices ended flat to marginally lower in a choppy trading session on Monday as hopes for a pick-up in demand later this year helped arrest last week’s broad sell-off.”
Will Oil Marketing Companies Pass on Benefit?
As we know that OMCs are responsible for adjusting fuel prices based on international crude oil rates. As per the recent drop in West Texas Intermediate (WTI) Crude or US crude and Brent Crude Oil, it could be the ideal situation for a cut in domestic rates. However, nothing can be said as Oil Marketing Companies didn’t pass the benefit of falling rates to consumers at the time of the Covid-19 pandemic.
India is one of the countries charging the highest taxes on fuel. Nearly 60% of what customers pay for crude oil comprises different taxes. Yet, the central government has not confirmed any reduction or timeline for a reduction. Earlier, Finance Minister Nirmala Sitharaman said that this is an issue where both states, as well as the Centre government, should consult to resolve.