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Petrol, diesel may get cheaper as OMCs become profitable: Report

Petrol and diesel prices in the country are expected to come down soon after remaining unchanged for over a year. The government has begun discussing ways to pass on the benefits of softening global crude prices to consumers before the 2024 Lok Sabha elections, according to a report by ET Now.

In contrast to peak losses of 17 per litre on petrol and 35 per litre on diesel in 2022, OMCs are now making a profit of 8-10 per litre on petrol and 3-4 per litre on diesel. According to the report, the oil ministry has already discussed crude versus retail price scenarios with OMCs.

Since oil marketing companies (OMCs) are now making profits, the government has begun discussions on the matter to give some relief to the people, the report further added.

The finance ministry and the oil ministry are pondering over the current crude oil price scenario. In addition to OMC profitability, they are discussing global factors, the report noted.

Why fuel is expected to get cheaper?

Due to strong profits in the last three quarters, OMCs’ overall losses have narrowed. The combined profit of three OMCs – IOC, HPCL and BPCL – was 28,000 crore last quarter, the report further stated. Since OMCs’ under-recovery has ended, the government thinks that the consumers must also reap the benefits.

Earlier this week, oil prices fell on the back of concerns about a drop in demand and continued uncertainty over the depth and duration of OPEC+ supply cuts.

According to a Reuters survey, OPEC oil output fell in November in the first monthly drop since July, as a result of lower shipments by Nigeria and Iraq as well as ongoing market-supported cuts by Saudi Arabia and other members of the wider OPEC+ alliance.

Earlier Mint reported quoting analysts that the falling oil prices could help India ease inflation. They also pointed out that the decline in oil prices will be a boost to the Indian equity market, especially the sectors that use crude oil as raw material. Conversely, some sectors can plummet due to the decline in oil prices.

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Published: 11 Dec 2023, 02:26 PM IST

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