Petrol and Diesel Prices to Fall as Crude Drops to $60? Here’s What IndianOil Chairman Says
Crude oil prices have fallen to around $60 per barrel, but IndianOil Chairman A.S. Sawhney says petrol and diesel prices may not drop immediately as fuel pricing depends on multiple factors.
New Delhi: With global crude oil prices falling sharply to around $60 per barrel, expectations are rising that petrol and diesel prices in India could come down soon. However, Indian Oil Corporation Chairman A. S. Sawhney has clarified that fuel prices are not linked to crude oil alone and may not fall immediately despite the global dip.
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Speaking on fuel pricing, Sawhney said the process is complex and works like a balancing game, where several factors—not just crude—decide the final price consumers pay at petrol pumps.
Why Crude Oil Prices Are Falling Globally
According to industry assessments, the global oil market is changing rapidly:
- Crude oil prices are hovering near $60 per barrel
- Lower global demand is putting pressure on prices
- Venezuela’s oil output is expected to rise significantly, potentially from 1 million barrels/day to up to 3 million
- Increased investments by US oil companies could add more supply to the market
These factors together are pushing international crude prices downward.
How Petrol and Diesel Prices Are Decided in India
Sawhney explained that Indian fuel prices are determined by oil marketing companies using two key components:
- Refining margins earned while processing crude oil
- Marketing margins earned from selling petrol and diesel at retail outlets
If one margin weakens, the other may strengthen. Prices are set to maintain a balance between the two, rather than moving directly with crude prices.
Why Prices May Not Drop Immediately
Even though refining margins are currently healthy, retail sales margins are under pressure. To keep operations stable, companies adjust pricing carefully. As a result, a fall in crude oil prices does not automatically lead to a cut in petrol or diesel prices.
Sawhney also pointed out that there is no fixed rule mandating price cuts whenever crude becomes cheaper.
Other Factors That Affect Fuel Prices
Apart from crude oil, several other elements influence petrol and diesel prices in India:
- Central and state taxes
- Transportation and logistics costs
- Dealer commissions
- Operational costs and company profits
- Government policies
Because of these factors, consumers may not see immediate relief even when crude prices fall sharply.
Future Investments Also Play a Role
The IndianOil Chairman stressed that oil companies must ensure steady income to invest in the future. This includes funding for:
- Bio-fuels
- Renewable energy
- New infrastructure and technology
Such long-term investments also influence how fuel prices are managed.
What This Means for Motorists
While the drop in crude oil prices is positive, petrol and diesel prices in India may not fall sharply or immediately. The pricing system considers multiple variables, and any relief at the pump depends on how these factors balance out in the coming weeks.
For now, motorists may need to wait longer to see the benefit of lower global crude prices.
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