State-Owned Fuel Firms Poised to Lower Petrol and Diesel Prices Amid Crude Price Decline

A recent decline in crude oil prices has created an opportunity for state-owned firms to reduce petrol and diesel prices by Rs 2-3 per litre. Rating agency Icra suggests that Indian Oil Marketing Companies have seen improved margins and anticipate potential price cuts if crude prices remain stable.

Recent weeks have witnessed a significant reduction in crude oil prices, providing state-owned firms with the ability to lower retail auto fuel prices by Rs 2-3 per litre, according to rating agency Icra.

The average price of India's crude oil basket dropped to USD 74 per barrel in September, a decrease from USD 83-84 per barrel in March, when the last price cut occurred. Icra noted an improvement in marketing margins for Indian Oil Marketing Companies as a result of this decline.

Icra estimates that petrol and diesel prices could be reduced further if the current crude price stability continues. Increased economic performance and mobility are expected to drive a 3-4% growth in fuel consumption in FY2025. Despite inventory losses and declining refining margins, the sector remains stable according to Icra's outlook.

(With inputs from agencies.)