International oil prices surged nearly 9 percent following military strikes by the United States and Israel on Iran and retaliatory action by Tehran, pushing Brent crude close to USD 80 per barrel. However, retail petrol and diesel prices in India are unlikely to witness an immediate hike despite the sharp rise in global benchmarks.
Brent crude, the global benchmark, climbed to nearly USD 80 per barrel, while US-traded crude rose 8.6 percent to USD 72.79, compared to around USD 67 last week.
For India, which imports about 88 percent of its crude oil requirements, any rise in global prices increases the country’s import bill and may create inflationary pressures. Crude oil is refined into fuels such as petrol and diesel, making global fluctuations directly relevant to domestic markets.
Despite the spike, retail fuel prices are expected to remain unchanged for now. The government continues to follow a calibrated pricing policy, allowing oil marketing companies to build margins when international prices are low and absorb losses when crude prices rise.
Petrol and diesel prices have largely remained frozen since April 2022. State-run oil marketing companies including Indian Oil Corporation, Bharat Petroleum Corporation Limited, and Hindustan Petroleum Corporation Limited have been balancing losses during high crude price periods with profits when global rates soften.
Officials indicated that the government intends to shield consumers from volatility unless there is an extraordinary surge in crude prices.
The situation was reviewed by Union Petroleum and Natural Gas Minister Hardeep Singh Puri, who held discussions with senior ministry officials and public sector oil companies regarding crude oil, LPG, and other petroleum supplies.
India also imports nearly half of its natural gas requirements, with a significant portion transported through the strategically crucial Strait of Hormuz, which Iranian authorities have threatened to block amid escalating tensions.
The government has stated that it is closely monitoring the evolving geopolitical developments and will take necessary steps to ensure the availability and affordability of petroleum products across the country.
Officials noted that oil companies have sufficient financial cushion to manage the current price spike. They pointed out that crude prices had earlier touched USD 119 per barrel in June 2022 following Russia’s invasion of Ukraine. Despite limited profits that year, oil marketing companies posted record profits of Rs 81,000 crore in FY24.
