Decision on petrol, diesel prices in 2-3 months:Govt says expensive crude bought during Iran war still being processed, losses reach ₹74,781 crore

Union Petroleum and Natural Gas Minister Hardeep Singh Puri on Thursday said a decision on reducing petrol and diesel prices can only be taken after assessing international crude oil prices over the next two to three months. He said public sector oil marketing companies had purchased crude oil at elevated prices during the recent conflict involving Iran, and refineries are still processing those high-cost inventories. As a result, an immediate reduction in retail fuel prices is not possible. Puri added that international crude oil prices have started declining following the reported easing of tensions between the US and Iran. If crude prices remain stable at lower levels for the next two to three months, consumers could get relief in petrol and diesel prices. Oil companies face under-recoveries of ₹74,781 crore The minister said state-run oil marketing companies have incurred under-recoveries of ₹74,781 crore as of June 30 due to selling fuel below cost. Providing a break-up of the losses, Puri said petrol sales recorded under-recoveries of ₹19,905 crore during the April-June quarter, while diesel under-recoveries stood at ₹1.44 lakh crore. Losses on LPG during the same period amounted to ₹24,148 crore. He added that when losses carried forward from previous quarters and the previous financial year are included, cumulative under-recoveries on LPG rise to around ₹2.1 lakh crore. What is under-recovery? Puri explained that under-recovery refers to the financial loss incurred by government-owned oil companies when they sell petrol, diesel or LPG at prices lower than their actual cost despite rising international crude oil prices. This is done to protect consumers from sharp increases in fuel prices. Fuel prices raised in May In May, state-run oil marketing companies, Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited — increased petrol and diesel prices by ₹7.50 per litre in phases, citing higher international crude oil prices. The three companies together account for more than 90% of India’s over one lakh fuel retail outlets. Despite the recent fall in crude oil prices, none of them has announced a reduction in retail fuel prices. Nayara Energy cuts fuel prices Private fuel retailer Nayara Energy has reduced petrol prices by ₹5 per litre and diesel prices by ₹3 per litre. In Bhopal, Nayara’s petrol price has come down from ₹119.79 to ₹114.79 per litre, while diesel prices have been reduced from ₹102.57 to ₹99.57 per litre. Crude oil prices ease after recent spike According to Puri, international crude oil prices were around $72 per barrel before the recent US-Iran conflict. During the hostilities, prices surged to nearly $110 per barrel before declining to around $70 per barrel as tensions eased. He said the sustainability of lower crude oil prices over the next few months will determine whether public sector oil companies are able to reduce petrol and diesel prices in India.