Petrol and diesel prices remained unchanged across major Indian cities on July 2, despite a sharp decline in global crude oil prices and easing geopolitical tensions in West Asia. While expectations of a retail fuel price cut have grown following the de-escalation of the US-Iran conflict and the recovery in international oil supplies, state-run oil marketing companies (OMCs) have kept pump prices steady. The development comes even as private fuel retailer Nayara Energy announced significant price cuts at its outlets, marking the first such reduction in more than two years.
On Wednesday, Nayara Energy reduced petrol prices by ₹5 per litre and diesel prices by ₹3 per litre across its nationwide network, citing softer global crude prices following improved stability in the Middle East. However, according to sources, public sector OMCs are unlikely to immediately match the reductions as they continue to recover losses incurred during the recent period of elevated crude prices. Fuel prices had been revised upward four times during the US-Iran conflict, with the latest hike increasing petrol and diesel prices by ₹2.60 and ₹2.70 per litre, respectively. Overall, retail fuel prices have risen by around ₹7.5 to ₹8 per litre since the conflict began.
As of Thursday, petrol is priced at ₹102.12 per litre in Delhi, ₹111.21 in Mumbai, ₹113.51 in Kolkata, ₹108.01 in Chennai, ₹115.73 in Hyderabad, and ₹110.89 in Bengaluru. Diesel is retailing at ₹95.20 per litre in Delhi, ₹97.83 in Mumbai, ₹99.82 in Kolkata, ₹99.66 in Chennai, ₹103.82 in Hyderabad, and ₹98.80 in Bengaluru. Although international crude prices have retreated to pre-conflict levels, consumers are yet to see the benefit reflected at fuel stations operated by state-run retailers.
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Global oil markets continued to soften on Thursday, with Brent crude for September delivery trading near $71 per barrel, extending losses after falling more than 3% over the previous two sessions. West Texas Intermediate (WTI) crude hovered around $68 per barrel. Market sentiment improved after reports indicated that crude shipments through the Strait of Hormuz had recovered to more than 10 million barrels per day, easing concerns over supply disruptions. Investors have also been encouraged by signs of progress in indirect negotiations between the United States and Iran, reducing fears of renewed tensions in one of the world's most critical oil-producing regions.
Fuel prices in India are influenced by several domestic and international factors. The most significant is the global price of crude oil, which serves as the primary raw material for producing petrol and diesel. Exchange rate movements between the Indian rupee and the US dollar also affect import costs, as India relies heavily on imported crude. In addition, central excise duty and state-level value-added tax (VAT) contribute substantially to retail fuel prices, resulting in variations across cities. While the recent decline in global crude prices has strengthened expectations of lower fuel costs, any decision by state-run OMCs will likely depend on their financial position and the sustainability of softer international oil prices in the coming weeks.
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