New Delhi – India's government has confirmed there is currently no proposal to increase domestic petrol and diesel prices, despite a significant rise in global crude oil costs. This decision underscores the government's commitment to ensuring energy security and maintaining stable fuel supplies for consumers.
The Indian crude basket has recently climbed to $115.27 per barrel as of September 22, with the average for the month so far standing at around $114.83 per barrel. This upward trend in global oil prices is creating considerable pressure on state-owned oil marketing companies (OMCs), which have kept retail fuel prices unchanged across the country.
OMCs Face Under-Recoveries Amid Price Stability
Sources indicate that OMCs are currently incurring substantial under-recoveries due to the gap between elevated crude import costs and stagnant retail prices. Estimates suggest losses of approximately ₹5 per litre on petrol and a more significant ₹23 per litre on diesel. If these high crude prices persist and retail fuel rates remain stable, the government may consider providing financial support to these companies at a later stage to safeguard their financial health.
Balancing Priorities: Stability, Finances, and Security
The government is navigating a complex balancing act, focusing on three key priorities: keeping domestic fuel prices stable for citizens, protecting the financial viability of OMCs, and ensuring uninterrupted energy supplies for the nation. This strategy is particularly critical amidst heightened geopolitical tensions and global supply-chain risks.
Diplomatic efforts are actively underway to facilitate the smooth movement of crude and fuel ships, especially through the Strait of Hormuz, a vital artery for global oil supplies. Furthermore, India is prioritizing stable crude procurement, including from Russia, while actively exploring avenues to diversify its crude sourcing. Nations like Iraq and Saudi Arabia are expected to play an increasingly important role as India broadens its crude import basket. Crude price volatility is also anticipated to continue in the lead-up to the US midterm elections in November, adding another layer of uncertainty to India’s oil import bill and domestic fuel pricing outlook.