Fuel Price Cut: International oil prices, against which domestic rates are benchmarked as India is 85 per cent dependent on imports to meet its oil needs, had softened late last year but firmed up again in the second half of January.
With the Budget approaching, there is speculation about a possible cut in excise duty on petrol and diesel. However, the stabilization of global oil prices makes further reductions in fuel taxes unlikely. Oil Marketing Companies (OMCs) have seen enhanced marketing margins due to the softening of crude prices, which could warrant a fuel price cut. The fiscal deficit and the impact on state tax collections are important considerations.
Bharat Petroleum Corporation Ltd (BPCL) reported an 82% rise in net profit for the December quarter. While the ongoing attacks on shipping vessels by Houthi militants in the Red Sea have not impacted flow to India. However, the freight has gone up due to rerouting via the Cape of Good Hope. Price reduction of the retail selling prices of our fuel products is speculative as the global situation remains volatile.
Ratings agency ICRA says marketing margins on retail sales of petrol and diesel for the Indian oil marketing companies have improved in the recent weeks with reduction in crude prices
Amid Brent Crude s drop below $80 per barrel, India s Modi government may consider a fuel price reduction before upcoming general elections, aiming to ease the financial burden on consumers. The Bharatiya Janata Party, eyeing a third consecutive term, may leverage the recent decline in oil prices to address living costs, benefiting from state-run oil marketing companies increased margins.