Global oil crisis to result in a 4.5% drop in fuel prices

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In the next fortnightly review, domestic fuel prices for petrol and diesel are expected to decrease by around Rs13 per liter, industry officials said on Thursday, citing a significant drop in global oil prices over the past two weeks as the reason for the price decline.

The officials stated that the price trend for all petroleum products was downward for the next review, scheduled for December 15. The government reviews the prices of petroleum products every fortnight and adjusts them according to international market trends and rupee exchange rates.

In the next review, petrol will be reduced by Rs13.10 per liter to Rs268.24 per liter from Rs281.34 per liter. Compared to the current price of Rs.289.71 per liter, HSD is likely to drop by Rs13.66 per liter to Rs276.05 per liter.

During the next review, the price of kerosene may decrease by Rs8.36 per liter to Rs192.80 per liter from the current price of Rs201.16 per liter, and the price of light diesel oil (LDO) may decrease by Rs10.23 per liter, to Rs165.70 per liter from the current price of Rs175.93 per liter.

Industry officials reported that the ex-refinery prices of petroleum products had been declining due to the sharp decline in global oil prices during the last two weeks.

It was stated, however, that the government would announce the final price after the exchange rate had been adjusted.

According to an industry official, it remains to be seen whether the government will pass on the full benefits of the declining prices in the global market to domestic consumers, as the government did not pass on all of the benefits of the decrease in petroleum product prices in the previous review of prices.

As a result of the exchange rate adjustment, the interim government kept petrol prices unchanged for the first half of December, despite a reduction of Rs10.70 per litre in the average Platts (a price benchmark service for the oil industry) over the exchange rate adjustment. As of December 1-15, 2023, PSO could adjust the rupee exchange rate downward by Rs 3.21 per liter.

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