ICRA: Oil Companies Could Cut Petrol and Diesel Prices by ₹2-3 as Marketing Margins Rise

According to ICRA, oil companies in India may soon be able to reduce petrol and diesel prices by ₹2 to 3 per litre. This is because the profit margins from selling auto fuels have improved, thanks to a recent drop in crude oil prices.

ICRA notes that if crude oil prices stay stable, companies like Indian Oil, Bharat Petroleum, and Hindustan Petroleum may have the option to lower fuel prices. Currently, petrol costs ₹94.72 per litre, and diesel is priced at ₹87.62 per litre in Delhi.

In September 2024, crude oil was around USD 74 per barrel, down from USD 83-84 per barrel in March, when petrol and diesel prices were last reduced. Global crude prices have fallen due to lower demand and higher production, especially in the U.S.

ICRA’s Senior Vice President, Girishkumar Kadam, explained that oil companies earned ₹15 more per litre for petrol and ₹12 more per litre for diesel in September compared to international prices. This suggests there is room to reduce prices further.

However, some challenges remain, including potential losses from inventory due to falling crude prices and the impact on standalone refiners from reduced profit margins.