New Delhi: State-run oil marketing companies (OMCs) may consider reducing petrol and diesel prices if international crude prices stay low for an extended period, said Pankaj Jain, secretary to the Union ministry of petroleum and natural gas.
Oil companies and the government would analyse the price trend for a longer duration, he said on the sidelines of the International Conference on Green Hydrogen on Thursday.
Brent has been below $75 a barrel for over a week now. The November contract of Brent on the Intercontinental Exchange was trading at $71.81 per barrel, 1.70% higher than the previous close. Earlier this month, global oil prices fell to three-year low levels amid demand concerns.
The decline in oil prices is expected to improve the profitability of OMCs, which would be expected to pass on the benefit to consumers through a price cut. International oil prices are key for India as the country imports about 85% of its total energy requirement.
Petrol, diesel prices were last revised ahead of the general election in March when they became cheaper by ₹2 per litre after a nearly two-year-long hiatus.
Given the recent slump in oil prices, Jain said that the petroleum ministry is in talks with the finance ministry for reviewing the windfall tax on the sale of locally produced crude oil and export of petroleum products.
The windfall tax was introduced in July 2022 amid soaring profits of oil- and gas-producing companies due to multiyear high oil prices. The secretary noted that there is a specific calculation mechanism for ascertaining the windfall tax to be levied from oil and gas companies, which is worked out by the revenue department of the finance ministry and the petroleum ministry is in constant touch with it.
Jain also said that the Organization of the Petroleum Exporting Countries (Opec) and its allies including Russia, commonly known as Opec+, should look at increasing their production in view of the growing demand from India.
Recently, Opec+ agreed to delay a planned oil output increase for October and November. The bloc was expected to raise production by 180,000 barrels per day (bpd). Opec+ has been resorting to deep output cuts to support the oil prices since December 2022.
“Now, Opec has said that they will decide on this by December 2024. We want the production to rise as our demand is there. If production rises then we will welcome it,” Jain said.