Potential to Cut Petrol, Diesel Prices says ICRA:The recent fall in crude oil prices has increased the profits of the country’s government oil companies, due to which there is a possibility of a reduction of 2-3 rupees per liter in the prices of petrol and diesel. This possibility has been expressed by the rating agency ICRA. According to the agency, if the prices of crude oil remain stable at the current level, then there is a possibility of reduction in the prices of petrol and diesel.
impact of fall in crude oil prices
According to ICRA, the average price of crude oil imported by India in September 2024 was $74 per barrel, which was up to $83-84 per barrel in March. This reduction can become the basis for reducing retail fuel prices. Earlier in March 2024, petrol and diesel prices were cut by Rs 2. The main reason for the fall in crude oil prices is the global economic slowdown and increased production in the US. Apart from this, OPEC+ has postponed the production cut for two months, which has further reduced prices.
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Increase in profits of oil companies
According to ICRA, the profit on retail sales of government oil companies has improved due to the fall in crude oil prices. According to ICRA Senior Vice President and Group Head (Corporate Ratings) Girish Kumar Kadam, in the current situation, there is scope for a reduction of 2-3 rupees in the prices of petrol and diesel.
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Commenting on the marketing margins of oil companies, Girish Kumar Kadam said, “ICRA estimates that the net realisation of public sector oil companies in September 2024 is around Rs 15 per litre higher on petrol and around Rs 12 per litre higher on diesel compared to international prices.There has been no change in their retail selling price (RSP) since March 2024. On March 15, 2024, the prices of petrol and diesel were reduced by Rs 2 per liter. If crude oil prices remain stable at current levels, there is scope for a reduction of Rs 2-3 per liter in the prices of petrol and diesel.Oil companies had recorded better operating margins during the last financial year, which compensated for their losses. However, there is also a possibility of inventory loss due to the sudden fall in crude oil prices, which may have some impact on the profits of the companies.
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What are the future prospects
Rating agency ICRA said that if crude oil prices remain stable, a reduction in petrol and diesel prices can be expected. Although no official announcement has been made in this regard, there is definitely a possibility of relief to investors and the general public. At present, the price of petrol in the capital Delhi is Rs 94.72 per liter and the price of diesel is Rs 87.62 per liter. Oil companies had stopped changing prices on a daily basis since November 2021, when the prices of petrol and diesel reached their highest level across the country.
