India may cut petrol, diesel prices as global oil prices reach 2024 lows

The government last cut petrol and diesel prices by Rs 2 per litre, ahead of the general elections in March 2024

India is considering reducing petrol and diesel prices, according to sources cited by India Today TV. The move comes as global oil prices hit their lowest levels since January 2024, providing state-run oil marketing companies (OMCs) with improved profitability.

The government had last cut petrol and diesel prices by Rs 2 per litre, ahead of the general elections in March 2024. Reports of potential price cuts now come as Jammu and Kashmir and Haryana prepare for Assembly elections.

Inter-ministerial discussions are reportedly ongoing as the government explores options to offer relief to consumers, a report by Business Today said.

The price of crude oil has tumbled recently, with US crude falling below $70 per barrel and Brent crude dropping by $1 to $72.75 per barrel. The sharp drop in prices is attributed to various factors, including the return of Libyan oil to the market and increased output from both Organization of the Petroleum Exporting Countries (OPEC+) and non-OPEC producers.

Impact on OMCs

Shares of India’s major state-run oil companies — Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL), and Indian Oil Corporation Ltd (IOC) — traded with losses of more than 2 per cent on Friday as the market reacted to the news of a potential price cut. 

Earlier in August, oil prices had dropped significantly due to concerns of a potential US recession, only to recover slightly on fears of escalating conflict in West Asia. Despite temporary recoveries, Brent crude has consistently settled at lower levels, hitting a one-year low last week due to concerns over-demand in the US and China.

The finance ministry has yet to make any official statement regarding the proposed price cuts.