Decline in crude oil prices does not mean immediate fuel price cuts: Minister

New Delhi, June 18 (IANS) A decline in global crude oil prices does not automatically translate into an immediate reduction in petrol and diesel prices in India, Minister of State for Petroleum & Natural Gas and Tourism Suresh Gopi said on Thursday.

Gopi told reporters that several factors influence domestic fuel pricing, including the time required for crude oil purchased at lower rates to reach India.

He said the recent increase in fuel prices cannot be rolled back instantly merely because international crude prices have softened.

“It will take time as the cheaper crude has to be transported to India via the Strait of Hormuz, which will see excessive ship traffic. Things will have to be normalised,” the minister said.

Gopi said the oil marketing companies (OMCs) were significantly impacted by volatility in global energy markets following the conflict in West Asia earlier this year.

According to him, the government absorbed a substantial part of the burden arising from higher crude prices in a bid to cushion consumers from the full impact.

“By absorbing the impact, the government lost Rs 12,000 crore. None of the states reduced their revenue by charging lower duties on higher fuel prices. The central government has to run and the oil companies have to survive,” he said.

He also said that fuel pricing is determined by multiple market and logistical factors and not solely by movements in international crude oil benchmarks.

On Thursday, crude oil prices declined, with the international benchmark Brent crude trading 1.64 per cent lower at around $78 per barrel. Similarly, US West Texas Intermediate (WTI) crude fell 2 per cent to about $75 per barrel.

The decline in crude prices came after progress in diplomatic efforts aimed at easing tensions in West Asia.

–IANS

ag/