New Delhi: Oil Minister Hardeep Singh Puri responded on Wednesday to speculations of a reduction in petrol and diesel prices in view of softening international oil rates by saying that the global market is in a "highly turbulent" situation and it has to stabilise before any cut. Three state-owned fuel retailers -- Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) -- which control roughly 90 percent of the market, have kept petrol and diesel prices on freeze for a record 21 month in a row.
This is despite the raw material (crude oil) cost surging last year, leading to heavy losses in the first half of 2022-23 fiscal year before easing rates propelled them to profitability in the last three quarters. "There has been no discussion with the oil marketing companies on any such issue," Puri told reporters when asked if the government has held discussions with the three firms on a reduction in fuel prices. The oil companies, he said, make their own decisions of fuel pricing.
"We are in highly turbulent situation. There are two areas on the global map which are in conflict situation," he said referring to the Russia-Ukraine war and the Israel-Hamas conflict that has led to cargo ships being attacked in the Red Sea. Puri said 12 percent of the global shipping traffic, 18 percent of oil and 4-8 percent of LNG trade goes through the Red Sea and the Suez Canal.
"God forbid, if there is further challenge or there is a disruption and you see an impact," he said. International oil prices rebounded in the aftermath of the attack on ships in the Red Sea. The rates have however eased in subsequent days. "In a highly volatile situation, our primary responsibility is to ensure availability and affordability," Puri said. "We are navigating this very carefully."
He said oil companies don't ask the government about price revisions. "Pray to god that there is no turbulence, things are normal," he added.
While at current prices, oil companies are making some money on petrol, and diesel -- the most consumed fuel accounting for almost 40 percent of all petroleum products consumed in the country -- but it has been in a "touch-and-go" scenario in recent weeks. On some days there is profit on diesel but on other days there is loss. There is no consistent trend.
Three retailers had been recouping losses they incurred for holding rates when crude oil prices shot through the roof last year. In May, international oil prices and retail pump rates had come at par, but the subsequent surge widened the gulf between cost and price realised.
For oil companies to reduce prices, oil prices will have to stabilise. Petrol and diesel prices have been on a freeze since April 6 last year. Petrol costs Rs 96.72 a litre in the national capital and diesel comes for Rs 89.62 per litre. The three firms made bumper profits in April-September -- the first half of the current fiscal -- but considering the low earnings of last year, they are yet to recoup all losses, officials said.
