Petrol and diesel prices across India remained unchanged on July 1, despite easing geopolitical tensions in the Middle East and a sharp correction in global crude oil prices. The stability in retail fuel rates comes as international benchmark crude prices have largely returned to pre-conflict levels following signs of de-escalation between the United States and Iran. Industry observers had anticipated a possible reduction in pump prices at the start of the month, but oil marketing companies (OMCs) opted to maintain existing rates.
According to the latest price revision, petrol continues to retail at Rs 102.12 per litre in Delhi, Rs 111.21 in Mumbai, Rs 113.51 in Kolkata, Rs 108.01 in Chennai, Rs 115.73 in Hyderabad and Rs 110.89 in Bengaluru. Diesel prices also remain unchanged at Rs 95.20 per litre in Delhi, Rs 97.83 in Mumbai, Rs 99.82 in Kolkata, Rs 99.66 in Chennai, Rs 103.82 in Hyderabad and Rs 98.80 in Bengaluru. Fuel prices vary across cities due to differences in state-level taxes and transportation costs.
Retail fuel prices have risen significantly since the outbreak of hostilities between the US and Iran earlier this year. Petrol and diesel prices have reportedly been increased four times during the conflict, with the latest revision adding Rs 2.60 per litre to petrol and Rs 2.70 per litre to diesel. Overall, fuel prices have increased by around Rs 7.50 to Rs 8 per litre since the start of the geopolitical tensions. Although crude oil prices have since moderated, analysts believe OMCs are unlikely to cut retail prices immediately as they continue to recover losses incurred during periods of elevated international prices.
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Global crude prices traded slightly higher on Wednesday after posting their steepest quarterly decline since the COVID-19 pandemic. Brent crude remained above $73 per barrel, while West Texas Intermediate (WTI) hovered near $70 per barrel. Market sentiment improved after indirect talks between the US and Iran in Doha were described as constructive, while tanker traffic through the Strait of Hormuz continued to recover. The easing of supply concerns has helped stabilise crude prices, although traders remain cautious about future geopolitical developments.
Fuel prices in India are influenced by several domestic and international factors. The biggest determinant is the price of crude oil in global markets, as India imports the majority of its crude oil requirements. Fluctuations in the rupee-dollar exchange rate also affect import costs, while freight charges and refinery expenses contribute to the final pricing. In addition, the central government's excise duty and state-level value-added tax (VAT) account for a significant portion of the retail price, resulting in variations between cities.
Despite the recent decline in global crude prices, market experts expect retail petrol and diesel rates to remain stable in the near term. Brokerages have indicated that oil marketing companies may continue to retain higher margins rather than immediately passing on lower crude costs to consumers, a strategy similar to that adopted in 2022. Going forward, any revision in domestic fuel prices will depend on international oil market trends, currency movements, government tax policies and the pricing decisions of OMCs.
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