Crude Oil Prices in India Drop Below $70 Per Barrel
India has seen its average import price for crude oil fall below $70 a barrel for the first time since the onset of the West Asia conflict. Despite this decline, consumers may not see immediate reductions in petrol and diesel prices. This is largely due to refiners trying to recover past losses and the government’s aim to balance fiscal costs, according to sources familiar with the situation.
On Friday, the average price of the Indian crude basket was recorded at $68.86 a barrel, a significant drop of over 56% from its peak of $157.04 on March 23, shortly after the conflict began on February 28. This decrease has relieved some financial pressure on state-run oil marketing companies (OMCs), which had been struggling with substantial losses. Reports indicate that these companies are currently earning a marketing margin of ₹5-6 per litre on petrol, although they still face losses of around ₹8-10 per litre on diesel.
The major players in this sector, including Indian Oil Corporation, Bharat Petroleum Corporation Ltd., and Hindustan Petroleum Corporation Ltd., have not responded to requests for comments.
India relies on imports for over 88% of the crude oil it processes. As global oil prices surged during the conflict, these OMCs faced growing losses since retail fuel prices remained constant. To alleviate some of these losses, the government cut excise duty on petrol and diesel by ₹10 per litre on March 27. However, losses had already reached ₹26 per litre for petrol and ₹81.90 per litre for diesel at that point.
Despite the excise cut, the situation deteriorated further as the conflict escalated and the Strait of Hormuz—a key passageway for about one-fifth of the world’s oil—became less accessible. This led to OMCs increasing petrol and diesel prices by a total of ₹7.35 and ₹7.53 per litre, respectively, between May 15 and May 25.
Oil prices began to stabilize after hints of a potential US-Iran peace agreement emerged, alongside a memorandum aimed at resolving the conflict. As energy shipments through the Strait of Hormuz resumed, international crude prices softened, enhancing India’s energy supply conditions.
Since February 27, when the Indian crude basket was priced at $71.17 a barrel, prices surged past $100 in early March before gradually falling below $80 by mid-June.
Petroleum Minister Hardeep Singh Puri noted that the Indian government has safeguarded its consumers from the shocks of rising global energy prices. The government has reportedly covered around ₹1.23 lakh crore to support consumers amid this crisis, with the excise duty cut alone costing nearly ₹14,000 crore a month in lost revenue.
Puri also emphasized the strategic measures India has taken, such as diversifying its crude supply sources and enhancing import infrastructure, which have helped prevent fuel shortages. He reinforced that India has maintained steady fuel supplies, avoiding the rationing experienced by various other nations during this crisis.
