NEW DELHI: Even as crude oil prices declined below $70 a barrel for the first time since December 2021, analysts believe that petrol and diesel prices in India are unlikely to come down anytime soon.
They indicated that oil marketing companies (OMCs) would prefer to see a sustained trend of lower crude prices for a longer period before making any decisions on domestic fuel prices.
“Oil marketing companies would possibly like to see sustenance of the trend of lower crude prices for longer before they take a call on prices,” said Prashant Vasisht, VP & co-head, corporate ratings, ICRA.
Brent Crude Future prices dropped below $70 a barrel on Tuesday, triggered by OPEC+’s downward revision of its demand forecast. Though the prices rebounded early on Wednesday, they fell below the $70 mark. Brent crude futures was trading at $69.68 a barrel and US West Texas Intermediate (WTI) crude at $66.37 at 7.56 PM IST.
“Crude oil prices have been depressed owing to repeated instances of increasingly weak demand from China even as US production is high at over 13 million barrels a day. Additionally, OPEC+ has extended oil production cut by two months leading to fears that there is disagreement on further production cuts leading to a bearish scenario. It is unclear whether this is a short term phenomenon as OPEC+ may after all increase cuts which could lead to increase in prices,” said Vasisht.
Indian oil Marketing companies have made revision of the prices of petrol and diesel across the country in March 2024 by Rs 2 per litre.
Now, the elections approaching in Haryana and Jammu & Kashmir, there is speculation that oil marketing companies might consider reducing fuel prices. Moreover, Indian oil marketing companies, including Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL), have reported significant profits in recent quarters, with a combined consolidated net profit of Rs 7,371 crore in the first quarter of this fiscal.