Petrol and diesel prices might decrease by ₹5-10 next month: Here's why

Oil Marketing Companies (OMCs) in India are contemplating a reduction in petrol and diesel prices by ₹5-10 next month, as their third-quarter results are anticipated to reveal combined net profits surpassing a record ₹75,000 crore.

Despite a softening in the costs of acquiring crude oil, state-run oil companies have maintained fuel prices since April 2022. The potential price cut is seen as a response to the significant net profits, and it may ease inflationary pressures, carrying potential significance in the lead-up to the 2024 General Elections.

The decision, expected after the release of third-quarter results, could address concerns of a surplus margin of ₹10 per litre, according to insiders. Hindustan Petroleum Corporation Ltd (HPCL) is set to declare its Q3 results on January 27, with Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL) anticipated to make similar announcements.

While the government, as the majority stakeholder, has control over public sector OMCs, it has affirmed that these firms are free to adjust fuel prices. The move comes amidst a broader economic context, where India's retail inflation reached a four-month high of 5.69% in December 2023, prompting efforts to keep it below the Reserve Bank of India's upper tolerance limit of 6%.