State-run oil marketing companies may review petrol and diesel prices in the next two to three months if crude remains stable around current lower levels, Petroleum and Natural Gas Minister Hardeep Singh Puri indicated on Thursday. An immediate reduction, however, is unlikely as refiners are still processing expensive crude procured during the West Asia conflict and continue to carry cumulative under-recoveries of around ₹2.19 lakh crore.
The statement comes as Brent crude has dropped nearly 44%, from a four-year high of $126.41 a barrel on April 30 to about $70.78 on Thursday. The September Brent contract was down 1.09%, after touching a fresh four-year low of around $70.37 a barrel.
“If the question is, when will you bring prices down, they are still carrying the stock which was bought at a higher price, with higher insurance and higher freight rates. If this low crude price persists for the next two or three months, then that would be a legitimate question,” Puri said addressing reporters.
Understanding High-Cost
Oil companies typically procure crude about two months before it is processed. Petrol and diesel currently reaching retail pumps are therefore being produced from crude purchased in April and early May, when international oil, freight and war-risk insurance costs were considerably higher. Fuel refined from crude bought at current lower rates will reach the market after the existing high-cost inventory is processed.
Crude prices began easing in the second half of June following the signing of a memorandum of understanding between Iran and the US on June 17 to de-escalate the conflict.
Puri said Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation incurred losses of ₹74,781 crore during April-June after absorbing a substantial portion of the increase in crude and product prices instead of fully passing the burden on to consumers.
The companies’ notional under-recoveries in the first quarter of FY27 stood at ₹1.88 lakh crore, comprising ₹19,905 crore on petrol, ₹1,44,819 crore on diesel and ₹24,148 crore on domestic LPG. Including ₹30,720 crore of unrecovered LPG costs from earlier quarters, the cumulative burden was around ₹2.19 lakh crore, the minister said.
Under-recovery refers to the notional shortfall incurred when fuel is sold in the domestic market below prevailing international benchmark rates.
Puri said the government had cushioned consumers through excise-duty reductions and limited pass-through of higher global prices. Excise duty on petrol and diesel was reduced on three occasions — November 2021, May 2022 and March 10, 2026. The latest reduction was ₹10 per litre each on petrol and diesel.
OMCs raised petrol and diesel prices for the first time on May 15, after absorbing the impact during the first two months of the conflict. Rates were raised on four separate days by a cumulative ₹7.50 per litre.
Financial Cushioning
The minister said petrol prices increased by only 5.58% in India during the crisis, compared with around 20% in developed economies and nearly 35% in neighbouring countries.
Despite the four-month disruption, India avoided fuel shortages by diversifying crude sourcing across continents and importing additional LPG from the US. None of the country’s 1.07 lakh retail outlets faced a dry-out or closure, Puri said.
“Every one of our refineries is stocked, every port, terminal, pipeline and depot is stocked. In all, we have stocks to cover the country’s requirement for 76–80 days,” he said.
Puri, however, said the available inventory did not reduce the need to expand India’s strategic storage capacity. The government would augment petroleum storage and intensify engagement with bilateral partners to strengthen energy sourcing and preparedness against future geopolitical disruptions.
“This is not to say that we don’t need additional strategic storage. We will be augmenting that,” he said, adding that India needed to increase storage space and deepen outreach to energy-supplying countries.