Crude Oil Falls Below 80 Dollars, But Why Aren’t Petrol and Diesel Cheaper?
Union Minister of State for Petroleum and Natural Gas Suresh Gopi said on Thursday that after the reduction in tension in West Asia, global crude oil prices have dropped below 80 dollars per barrel. However, consumers should not expect an immediate reduction in fuel prices.
Speaking to reporters, Gopi explained that when international crude oil prices fall, fuel prices cannot be reduced immediately because it takes time to purchase cheaper oil and transport it to India. He said that cheaper crude oil will take time to reach the market because it has to pass through the Strait of Hormuz, after which refining will take time, and only then will the situation normalise gradually.
Gopi also mentioned that the recent increase in fuel prices had only a direct impact of about Rs 3.94 per litre, but this increase cannot be reversed immediately just because crude oil prices have softened.
The minister said that at the beginning of this year, when conflict escalated in West Asia, Indian oil companies faced significant pressure, and the Centre bore some of that burden. He added that the central government incurred a loss of Rs 12,000 crore in absorbing this impact. No state reduced its taxes on fuel to lower the burden on consumers.
While crude oil prices have seen a sharp decline, analysts are divided on how quickly the global oil market will return to normal. Goldman Sachs has revised its oil price forecasts downward, expecting Persian Gulf exports to normalise faster than anticipated. The brokerage has cut its Q4 2026 Brent crude forecast from 90 dollars to 80 dollars per barrel and lowered its 2027 average forecast from 80 dollars to 75 dollars.
However, MK Global has warned that despite diplomatic success, the market may be underestimating near-term supply disruptions. The brokerage cited logistical bottlenecks, high insurance costs, tanker availability issues, and security concerns, saying that normalising supply through Hormuz could take weeks or even months.
MK further stated that crude oil prices could rise to around 90 dollars or higher in the coming weeks. The brokerage expects Chinese oil imports to improve after months of inventory drawdowns and sluggish refinery activity. With global inventories tight and several countries trying to rebuild strategic reserves, demand could remain higher than supply until 2026.
ICICI Securities said that removing the 10-15 dollar per barrel premium related to the conflict could reduce India’s crude oil import bill by 1.5-1.8 billion dollars every month. Lower crude and gas prices could also improve profitability for refiners, city gas distributors, and LNG infrastructure companies.
The brokerage also noted that upstream producers like ONGC and Oil India will continue to benefit from production growth support over the next two years, even if crude oil prices stabilise around 80 dollars per barrel.
For now, despite the fall in global crude oil prices, there is no immediate relief expected at petrol pumps in India.
