Oil companies suffered Rs 74,781 cr loss on fuel sales amid West Asia crisis: Puri

The West Asia conflict, which disrupted supply chains, led to Indian oil companies suffering Rs 74,781-crore losses for selling petrol, diesel and LPG below cost, Union Petroleum Minister Hardeep Singh Puri said on Thursday.  He also said a reduction in prices at home hinges on oil prices staying low for the next few weeks.

Puri further said international crude oil prices have come down but companies are still processing crude they bought at the height of the West Asia crisis.

Oil companies typically buy crude oil — the raw material for producing fuel — at least two months in advance. So, crude oil that is being processed now is essentially what was bought in April or early May when international prices were very high.

Asked if there would be a cut in prices of petrol and diesel, Puri said this would be a legitimate question if oil prices stayed low for the next few weeks.

“We are using the crude petroleum stock today that we had bought two months ago (at a price that existed two months ago).

If this (decline) continues for 2-3 months, we will see. But it is a hypothetical situation,” he said. The Minister highlighted that the petrol price increase in the developed world was around 20% and around 35% in India’s neighboring countries, but in India, the increase in petrol price was just 5.58 per cent during the crisis.

“We did well without any dryout or closure at any of the 1,07,000 retail outlets during last four months (February 28th till the end of June),” Puri said.

Private fuel retailer Nayara Energy has cut petrol prices by Rs 5 per litre and diesel prices by Rs 3 per litre across its retail network from July 1, making it the first major cut in retail fuel prices since crude prices began falling.

The decision may put pressure on rival private retailers to review their own prices if international oil markets remain stable.

Crude oil prices started coming down only in the second half of June after the US and Iran reached an agreement to end the conflict. The closure of the Strait of Hormuz during the US-Iran war triggered one of the most severe global energy disruptions in recent decades, sending oil prices soaring and raising concerns over supply shortages across major importing nations.