In a potential respite for the common man, reports are surfacing that petrol and diesel prices could witness a significant reduction, marking the first such decrease in over a year and a half. The buzz surrounding this development has...
In a potential respite for the common man, reports are surfacing that petrol and diesel prices could witness a significant reduction, marking the first such decrease in over a year and a half. The buzz surrounding this development has impacted the shares of major oil marketing companies (OMCs) like Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Limited (HPCL), and Bharat Petroleum Corporation Limited (BPCL).
Fuel Price Cut in India
According to an ETNow report, the anticipated fuel price cut is speculated to fall in the range of Rs 8-10 per litre. However, the critical question remains unanswered – who will bear the brunt of this rate cut? There are two possible scenarios: the government could absorb the impact by reducing the excise duty, or OMCs might take a hit on their marketing margin.
The last instance of fuel price reduction dates back to May 21 of the previous year when Finance Minister Nirmala Sitharaman announced a reduction in excise duty by Rs 8 on petrol and Rs 6 on diesel. Now, with international crude oil prices experiencing a downward trend in 2023 compared to the elevated levels of the previous year, there are heightened expectations for OMCs like IOC, HPCL, and BPCL to pass on the benefits to consumers.
Currently, OMCs are enjoying a profit margin of Rs 8-10 per litre on petrol and Rs 3-4 per litre on diesel. This marks a significant turnaround from the peak losses of Rs 17 per litre on petrol in 2022 and Rs 35 per litre on diesel. The shift from losses to profits underscores the volatility in oil prices and its direct impact on the financial health of OMCs.
The speculation of an impending fuel price cut has triggered a market reaction, with shares of key oil marketing companies experiencing a decline on the last trading day of 2023. Indian Oil witnessed a decline of over 2 percent, trading at Rs 130.45 at 10:08 am. HPCL, on the other hand, faced a drop of around 4 percent, with its shares at Rs 401.60, and BPCL recorded a decrease of about 3 percent, trading at Rs 453.05.
As the nation awaits official confirmation and clarity on the details of the fuel price reduction, the market continues to respond to these developments, emphasizing the delicate balance between international oil prices, government policies, and the financial dynamics of OMCs. The coming days are crucial, and consumers are hopeful that the expected relief in fuel prices materializes in the beginning of 2024. Is this a move meant to garner votes during the upcoming 2024 Genera Elections? You tell us!
The post Petrol and diesel prices to soon be cut by Rs. 10/liter: Details first appeared on Cartoq.