Global crude oil prices fell on Thursday to their lowest levels since before the outbreak of the Iran conflict, easing concerns over energy supplies and providing a boost to India's economy. However, state-run fuel retailers left petrol and diesel prices unchanged despite the sharp decline in international oil prices.
Brent crude, the international benchmark, fell to around $72-73 a barrel, while US benchmark WTI crude slipped below $70 a barrel, erasing the geopolitical premium that had pushed prices to as high as $120 a barrel during the peak of the conflict earlier this year.
The Indian basket of crude oil averaged $70.71 a barrel on June 24, compared with $71.17 a barrel on February 27, a day before the conflict began. However, the average price for June remains higher at $86.31 a barrel, compared with $72.47 a barrel in February.
Despite the fall in crude prices, petrol and diesel prices remained unchanged. Retail fuel prices had earlier been increased by around Rs 7.50 per litre each during the surge in international oil prices, but oil marketing companies have not reduced pump prices so far.
Industry officials said fuel prices are generally based on average international crude prices over the previous fortnight or month rather than daily fluctuations. They said any reduction in retail prices would depend on whether lower crude prices are sustained.
Officials said state-run fuel retailers are currently earning healthy marketing margins on petrol, although diesel continues to generate modest losses.
The government has also eased its emergency monitoring of the oil market. Inter-ministerial briefings that began after the conflict and were later reduced to twice a week were not held this week, indicating that concerns over immediate supply disruptions have receded.
The fall in crude prices follows the normalisation of tanker traffic through the Strait of Hormuz, a key route for global oil supplies. US officials said oil shipments through the waterway have returned close to pre-conflict levels.
For India, which imports more than 88 per cent of its crude oil requirement, lower oil prices reduce the import bill, narrow the current account deficit and ease pressure on inflation by lowering fuel, transport and manufacturing costs.
Lower crude prices are also expected to benefit fuel-intensive sectors such as aviation, logistics, chemicals, paints and consumer goods, while improving the outlook for the rupee by reducing demand for dollars for energy imports.
Analysts, however, cautioned that geopolitical risks in West Asia have not disappeared completely and said any sustained reduction in domestic fuel prices would depend on whether global crude prices remain stable in the coming weeks.
