New Delhi: State-run oil marketing companies (OMCs) may consider reducing petrol and diesel prices if international crude oil prices remain low for a prolonged period, said Pankaj Jain, secretary, Union Ministry of Petroleum and Natural Gas.
Oil companies and the government will look at the price trend over a longer period, he said on the sidelines of the International Conference on Green Hydrogen on Thursday.
Brent crude has been trading below $75 a barrel for more than a week. The November Brent contract on the Intercontinental Exchange was trading at $71.81 a barrel, up 1.70% from the previous close. Earlier this month, global oil prices fell to three-year lows amid demand concerns.
Falling oil prices are expected to improve the profitability of OMCs, which are expected to pass on the benefit to consumers through lower prices. International oil prices are key for India as the country imports around 85% of its total energy needs.
Petrol and diesel prices were last revised before the general elections in March, when they fell by 10%. ₹2 per litre after a pause of almost two years.
Given the recent fall in oil prices, Jain said the oil ministry is in talks with the finance ministry to review the extraordinary tax on the sale of locally produced crude oil and export of petroleum products.
The windfall tax was introduced in July 2022 amid skyrocketing profits of oil and gas producing companies due to high oil prices for several years. The secretary noted that there is a specific calculation mechanism for determining the windfall tax to be levied on oil and gas companies, which is developed by the revenue department of the Ministry of Finance and the Ministry of Oil is in constant contact with it.
Jain also said the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, commonly known as OPEC+, should consider increasing their production in view of rising demand from India.
OPEC+ recently agreed to delay an oil production increase planned for October and November. The bloc was expected to increase output by 180,000 barrels per day (bpd). OPEC+ has been resorting to deep production cuts to support oil prices since December 2022.
“Now, OPEC has said that it will take a decision on this in December 2024. We want production to go up because we have demand. If production goes up, we will welcome it,” Jain said.
Disclaimer:
The information contained in this post is for general information purposes only. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the post for any purpose.
We respect the intellectual property rights of content creators. If you are the owner of any material featured on our website and have concerns about its use, please contact us. We are committed to addressing any copyright issues promptly and will remove any material within 2 days of receiving a request from the rightful owner.