Even as crude oil surges past $100 a barrel, the government continues to maintain that oil marketing companies are unlikely to increase petrol and diesel prices in the country in the foreseeable future. Government officials said the companies can absorb losses until crude prices cross $130 per barrel.
The ongoing conflict between Iran and Israel has begun to take a toll on global crude prices, with oil crossing the $100-a-barrel mark for the first time in four years. Brent crude touched an intraday high of $119 per barrel before cooling to around $102.1 per barrel at 19:51 IST, while US WTI crude was trading at $100.2 per barrel. The surge comes after US crude prices jumped 36% and Brent crude rose 28% last week.
“When crude prices were low in the international market, these companies made profits, and when crude prices were high, they would absorb the losses. Revision of petrol and diesel prices is unlikely in the foreseeable future,” said the official.
The last time crude crossed $100 per barrel was in late February 2022 following Russia’s invasion of Ukraine. Brent crude reached an intraday peak of $139.13 per barrel on March 7, 2022, while WTI crude hit $130.50 per barrel during the same period.
Meanwhile, US President Donald Trump claimed the price surge is temporary and will come down. In a social media post, Trump said the rise in oil prices is short-term and will drop once the destruction of the Iran nuclear threat is over.
“Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for USA, and world, Safety and Peace,” Trump said in a social media post.
The sharp rise in crude prices comes after major oil suppliers halted production when their facilities were hit by missiles or rockets. In addition, the closure of the Strait of Hormuz, a key waterway for global crude supply, has added to market fears. Several producers have also curtailed output due to storage constraints and export disruptions.
As crude prices surged, G7 countries decided to release 400 million barrels of crude from their strategic reserves. However, the petroleum ministry said India will not release crude from its strategic reserves as it is not part of the International Energy Agency (IEA) group.
In India, petrol and diesel prices have not been increased so far, with the government maintaining that fuel supplies remain adequate. However, the government on Saturday raised the prices of domestic and commercial LPG cylinders by ₹60 and ₹115 respectively.
The last major nationwide revision in petrol and diesel prices took place on March 15, 2024, when oil companies announced a ₹2 per litre cut for both fuels.