India’s average crude oil import price has fallen below $70 a barrel for the first time since August 2021 even as benchmark Brent crude on Monday opened below $65, raising hopes of a downward revision of petrol and diesel rates that could bring some cheer to customers, and enhancing the macroeconomic stability of an economy that imports most of its fuel, people familiar with the matter said.
India’s average crude import cost fell to $69.39 a barrel (as on Friday), a decline of over 22% from $89.44 in April last year. Official data could not be updated because Monday was a public holiday.
Global crude oil prices may fall further because of expected weak global growth amid heightening risks of a trade war, leading to demand contraction, at least four people mentioned above said requesting anonymity. The people include oil firm executives and sectoral experts. India imports more than 87% crude it processes and in the refining business crude is the prime raw material constituting about 90% of the total cost.
Goldman Sachs sees Brent averaging $63 for rest of 2025, a Reuters’ report said on Monday. Adding to the bearish estimates, the Organisation of Petroleum Exporting Countries (OPEC) cut forecasts for global oil demand growth this year and next. The cartel lowered demand growth projections for 2025 and 2026 by about 100,000 barrels a day, projecting an expansion of 1.3 million barrels a day — or approximately 1% — for each year, according to a report from its secretariat in Vienna, Bloomberg reported.
To be sure, the government has been quick to reap the windfall of falling crude prices.
Addressing a press conference on April 7 after the government announced raising excise duty on petrol and diesel, petroleum minister Hardeep Puri said that oil companies held inventories of 45 days costing them about $75 per barrel. He said companies would have some “headroom” to reduce pump prices of petrol and diesel when their inventory cost decline in the range of $60 to $65 a barrel.
The expected windfall gains to the government is in the region of ₹32,000 crore. It raised excise duty on petrol and diesel by ₹2 a litre from March 8 for cross subsidising cooking gas cylinders. “The next beneficiary would be the consumer as government wants public sector OMCs (oil marketing companies) to slash retail prices of petrol and diesel, if international oil prices remain low,” one executive, mentioned in the first instance, said.
Consumer prices for petrol and diesel were last reduced over a year ago by ₹2 per litre each on March 15, 2024, ahead of the general elections. That month, India’s average cost of crude oil import was $84.49 per barrel. In the first two weeks of current month, the average import cost plunged further to $69.39 per barrel, a 17.87% dip from March 2024 when pump prices of auto fuels were last reduced.
“Even after factoring in rupee-dollar exchange rate, OMCs are currently making at least ₹10-12 per litre margin on auto fuels, but ‘base’ prices of petrol and diesel have not been revised in lines with international benchmarks,” a second person, an expert, said.
According to price buildup published by state-run Indian Oil Corporation (IOC), the company on April 8 reduced the base price of petrol (which also factors in exchange rate) by ₹2 to ₹52.84 per litre from ₹54.84 a litre earlier. The government, however, mopped up the benefit of base price reduction by raising excise duty from ₹19.90 per litre to ₹21.90 per litre on April 8. Thus, pump price pf petrol remained unchanged to ₹94.77 per litre in New Delhi.
Similarly, base price of diesel was cut from ₹55.76 a litre to ₹53.76 per litre per litre on April 8, but the government mopped up this ₹2 per litre benefit by raising excise duty on diesel from ₹15.80 a litre to ₹17.80 per litre, while pump price of the fuel remained unchanged at ₹87.67 per litre in New Delhi.
