The de-escalation efforts between Israel and Iran have brought much-needed relief to the Indian stock markets. The easing of geopolitical tensions has led to a sharp correction in global crude oil prices, which have fallen nearly 15%, coming to around USD 95 per barrel in recent sessions.
Previously, prices were touching USD 120 per barrel. For a country like India, which imports around 80% of its crude oil requirements, this decline is a significant positive. With the crash in crude oil prices, there has been widespread speculation about whether petrol, diesel, and LPG prices will drop in the domestic market.
Petrol, diesel, and LPG prices
Due to oil prices reaching record highs, there has been a substantial increase in petrol and diesel prices lately. While the government has frozen regular petrol and diesel prices at state run pumps with petrol at Rs 94.77 and diesel at Rs 87.67 in Delhi as of April 8. This stability is being maintained through significant excise duty cuts of Rs 10 per litre to shield common consumers. Meanwhile, premium petrol like XP100 recently spiked by Rs 11 to reach Rs 160 per litre. Private retailers like Shell and Nayara have also increased their rates by Rs 5 to Rs 25 per litre to keep up with surging import costs. This global volatility has led to a major price hike in the commercial sector, with commercial LPG cylinders jumping by over Rs 195 in April and domestic LPG seeing a Rs 60 hike in March.
Pressure on OMCs
Despite the recent relief in global crude oil prices, petrol and diesel prices across the country have seen a sharp rise. Oil marketing companies (OMCs) have been under immense pressure due to significant under-recoveries, estimated at around Rs 24-Rs 25 per litre on petrol. Rising fuel prices have remained a major concern, largely driven by the steady increase in crude oil prices over the past month since the war began. Now in its 40th day, the prolonged conflict has kept global oil markets under pressure. As a result, fuel prices across the country have been increased by both private players and state-owned oil companies.
De-escalation could be temporary
The current phase of de-escalation could prove temporary. Although the U.S. and Israel have moved toward a ceasefire understanding, the situation remains fragile and uncertain. Experts believe that any unexpected or unprecedented action by either the U.S. or Iran could once again escalate tensions and reignite the conflict. Market participants and analysts are closely monitoring how long this ceasefire holds. If it is disrupted for any reason, hostilities could resume, bringing back volatility in global markets, especially in crude oil prices.
Petrol and diesel prices may fall if
According to experts, if the situation remains stable and crude oil prices continue to hover in the range of USD 90 to USD 95 per barrel for the next two weeks to a month, there could be some relief for consumers. In such a scenario, the government may consider a marginal reduction in petrol and diesel prices, offering slight respite after the recent surge.