After the announcement of the US-Iran deal, there has been a huge fall in the prices of crude oil. Crude oil prices in the international market fell by more than 4% in early trading on Monday. Now it remains to be seen when the central government will provide relief to the common man by reducing the prices of petrol and diesel.
Brent crude fell more than 4% to about $83.75 a barrel amid reports of war threats in the Middle East. WTI crude also fell nearly 5% to around $80.87 a barrel. According to sources in the Union Petroleum Ministry, the government is keeping an eye on the situation. The country’s oil marketing companies suffered huge losses during the tension in the Strait of Hormuz. The Center had also reduced excise duty; But when losses became difficult to handle, prices were raised. This loss cannot be compensated in a day.
Sources say that if the situation remains good, the government will definitely provide relief to the public. The situation is still being monitored as the clouds of crisis are beginning to clear; Once the situation clears up, prices of petrol and diesel are expected to come down. Sources also said Indian oil marketing companies are recouping losses incurred during the recent West Asia crisis, when crude oil prices touched $120 per barrel in the global market. During that period, for a long time the companies did not pass the entire cost burden on to the customers. However, petrol and diesel prices have increased by about ₹7 to ₹8 per liter since mid-May. If crude oil prices remain low and stable, companies will soon be able to recover their losses.
Excise duty cut on petrol
In March, the government had reduced excise duty on petrol by ₹3 per litre. While the excise duty on diesel was already reduced to zero, there is little scope for immediate further relief by way of tax cuts as the tax rate is already at a very low level. As a result, the government will consider measures to provide relief to the public only when prices remain not only low but also stable. It is noteworthy that India imports more than 85% of its crude oil requirement. Despite the fall in oil prices in the international market after the announcement of the US-Iran deal, the rupee-dollar exchange rate and higher freight and insurance costs are impacting the cost of imports. Sources say the government is keeping an eye on every aspect of the situation; However, this will take some time.
**Keep an eye on crude oil prices**
The special thing is that Union Petroleum Minister Hardeep Singh Puri had recently said that if the prices of crude oil remain low in the global market for a long time, then customers can benefit. Continuous fall in crude oil prices will improve the financial condition of oil companies, which will create scope for reducing prices. If Brent crude prices remain in the range of $80 to $85 per barrel for several weeks or months, petrol and diesel prices in India could fall by about ₹2 to ₹5 per litre.