Thu Sep 26 12:46:54 UTC 2024: ## Oil Price Cuts on the Horizon as Crude Prices Dip: ICRA
**New Delhi:** There’s good news for Indian drivers as state-owned oil companies may soon reduce petrol and diesel prices. According to rating agency ICRA, the companies have room to cut prices by ₹2 to ₹3 per litre, following a recent decline in crude oil prices.
The improved marketing margins on fuel sales, attributed to the lower crude oil costs, have created this potential for price reduction. ICRA forecasts that if crude prices remain stable, retail fuel prices will likely be adjusted downwards.
Crude oil import prices have fallen significantly from USD 83-84 per barrel in March to USD 74 per barrel in September. This decline, fueled by global economic slowdown concerns and increased US production, has raised hopes for a price cut in India.
Despite the lack of price regulation in India, state-owned oil companies like Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation have not adjusted prices in line with cost changes since 2021.
However, ICRA estimates that these companies have enjoyed higher profits on petrol and diesel sales in recent months, making a price reduction feasible. Currently, petrol costs ₹94.72 per litre and diesel costs ₹87.62 a litre in Delhi.
The global decline in demand for refined products due to factors like increased EV sales, a weakening real estate sector, and low industrial activity in China and Europe has contributed to the opportunity for price adjustments.
While a price cut is possible, ICRA warns that potential inventory losses due to the sharp decline in crude prices could impact profitability in the second quarter of the fiscal year.
This news offers much-needed relief for Indian consumers facing rising fuel costs. However, it remains to be seen when and how much oil companies will reduce petrol and diesel prices.
First Piper 