Winning Bizness Desk
Mumbai.Global crude oil prices have slipped back to the level seen before the Iran conflict, raising hopes of cheaper fuel in India. Benchmark Brent crude dropped to around $72 per barrel on Thursday, almost matching the $72.29 level recorded a day before the conflict began. The decline follows easing geopolitical tensions and improved oil supplies through the Strait of Hormuz. However, experts say Indian consumers may have to wait for several weeks before lower crude prices translate into reduced petrol and diesel prices at fuel stations.
Crude prices fall after peace breakthrough
The decline in crude prices comes after diplomatic progress between the United States and Iran. Following an agreement reached on June 17, peace talks held in Switzerland resulted in the US partially easing restrictions on Iranian oil exports. This has helped restore confidence in global energy markets and improved the movement of oil shipments.
Key developments include:
- Brent crude has fallen to around $72 per barrel.
- Around 80 ships have crossed the Strait of Hormuz since Monday.
- Before the conflict, more than 100 ships passed through the route every day.
- Oil supplies are gradually returning to normal despite lower shipping volumes.
Why cheaper crude will not cut fuel prices immediately
Energy expert Narendra Taneja says the petrol and diesel currently being sold in India are produced from crude oil purchased much earlier at significantly higher prices. While international crude had touched nearly $110 per barrel at that time, Indian refiners effectively paid around $125 per barrel after adding freight and other costs. As a result, refiners and oil marketing companies are still processing expensive crude purchased during the period of high global prices, delaying any immediate benefit from the latest decline.
Time needed for cheaper oil to reach pumps
The journey of crude oil from producing countries to Indian fuel stations takes nearly two and a half months. Oil bought at current prices first needs to be loaded onto ships, transported to Indian ports, refined into petroleum products and finally distributed across retail outlets.
The process generally involves:
- 15-20 days for loading crude at exporting ports.
- 55-60 days for sea transport to India.
- Additional time for refining, storage and delivery.
- Overall cycle of nearly 75-80 days before fuel reaches consumers.
Oil firms may recover losses before price cut
Even after cheaper crude reaches Indian refineries, an immediate reduction in fuel prices appears unlikely. According to Taneja, oil marketing companies are currently losing around Rs 7.5 per liter on petrol and diesel sales. The government had also reduced excise duty by Rs 10 per liter earlier, limiting revenue collections. Industry observers believe companies may first recover part of these losses before passing on the benefit of lower crude prices to consumers. This means any retail fuel price reduction is expected to be gradual rather than sudden.
Relief likely around Dussehra, outlook remains stable
Experts believe consumers may begin seeing some relief by late August or early September, while a more visible reduction in petrol and diesel prices is likely around the Dussehra festival. Taneja also believes there is little possibility of crude oil prices witnessing another sharp rise in the near future, as geopolitical concerns have eased considerably. If global supplies continue to improve and market conditions remain stable, India could finally see lower fuel prices after months of elevated costs.
