Oil prices at seven-month low

New Delhi: International oil prices have hit a seven-month low but there is no change in retail selling price of petrol and diesel in India as state-owned fuel retailers recoup losses incurred for holding rates for a record five months despite rising cost.

International benchmark Brent crude fell below $90 per barrel last week for the first time since early February as recession fears weigh on demand. It has since recovered and is trading at $92.84 per barrel, the lowest in six months. Prices fell despite bullish developments, including Russia keeping the North Stream pipeline offline and producers cartel OPEC and its allies (OPEC+) cutting production. But this has not led to any revision in retail petrol and diesel prices in India and they continue to be on freeze for a record-setting 158 days. Responding to reporters' questions on no change in fuel prices, oil minister Hardeep Singh Puri had on Friday sought to link the no revision to losses state-owned fuel retailers incurred in keeping rates unchanged when international oil prices surged to multi-year high.

"When (international oil) prices were high, our (petrol and diesel) prices were already low," he had said. "Have we recouped all our losses?" he went on to ask. He however did not elaborate on the losses incurred on keeping rates steady since April 6. The basket of crude oil that India imports averaged $88 per barrel on September 8. It had averaged $102.97 in April, before rising to $109.51 in the following month and $116.01 in June. Prices started to fall in July when the Indian basket averaged $105.49 a barrel. It averaged $97.40 in August and $92.87 in September so far. State-owned fuel retailers Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) have not exercised their right to adjust the retail selling price of petrol and diesel in line with the international costs for over five months now to help the government manage runaway inflation. At one point, they were losing Rs 20-25 per litre on diesel and Rs 14-18 a litre on petrol as international oil prices soared. These losses have been trimmed with the fall in oil prices.

"There are no under-recovery (losses) on petrol now. For diesel, it will take some time to reach that level," an official said. But this is unlikely to translate into an immediate reduction in rates as oil companies will be allowed to recoup losses they had accumulated on selling fuel at below cost in the last five months, another official said. Puri had on Friday stated that international oil prices need to stay at $88 per barrel or fall below to bring some relief. India is 85 per cent dependent on imports for meeting its oil needs and so retail pump rates are directly dependent on happenings in the global markets. IOC, BPCL and HPCL are supposed to revise the retail price of petrol and diesel daily in line with cost.