A petrol, diesel price cut could be coming your way soon. Here's why

A fuel price cut could be coming your way soon. The marketing margins on retail sales of auto fuels for the Indian oil marketing companies (OMCs) have improved in the recent weeks with reduction in crude prices, said a report by ICRA.

Girishkumar Kadam, Senior Vice President and Group Head, Corporate Ratings, ICRA Ltd, said, “ICRA estimates that the OMCs’ net realisation was higher by Rs 11/litre for petrol and Rs 6/litre for diesel vis-à-vis international product prices in January 2024 (till January 19). The marketing margins for petrol witnessed an improvement in the last few months after a sharp decline in September 2023. While the margins for diesel were negative till October 2023, they rebounded and turned positive from November 2023. The retail selling prices of these fuels have been unchanged since May 2022 and headroom for their downward revision may emerge if crude prices remain stable.”

ICRA feels these enhanced margins could lead to lower retail fuel prices, provided crude prices remain stable. 

Benchmark crude  prices have been  hovering below $80 per barrel as subdued demand outlook, combined with rising production in Libya and Norway, partly offset apprehensions over a wider conflict breaking out in West Asia. 

Petrol and diesel prices have been frozen since May 2022.

The Special Additional Excise Duty (SAED) on petroleum products was reduced in line with international product prices. It had witnessed multiple revisions since it was initially imposed in July 2022. In the latest revision on January 1, 2024, the SAED was decreased on diesel and ATF to nil and remained nil on petrol, the agency pointed out.