Petrol, diesel prices: OMC review in 2-3 months

What changed, and why it matters

India’s retail petrol and diesel prices may come up for review in the next two to three months if global crude prices remain subdued and stable, Union petroleum and natural gas minister Hardeep Singh Puri said in New Delhi. The comment comes at a time when international oil benchmarks have fallen sharply, easing immediate fears of further price increases. But the minister also flagged a key lag in the system: oil marketing companies (OMCs) are currently selling fuel refined from crude bought earlier at higher prices and with higher shipping-related costs. That time lag, along with accumulated losses, is why lower crude does not automatically translate into an instant cut at the pump.

Minister Puri’s key remarks on a possible price review

Puri said it would be a “legitimate question” to ask about price cuts if low crude prices persist for the next two to three months. He pointed out that OMCs are still carrying inventory purchased when crude, insurance, and freight costs were higher.

He also described the situation as hypothetical, noting that the crude being processed and sold today was bought about two months earlier at then-prevailing prices. The message was that any retail change, if it happens, is likely to follow a period of sustained lower input costs rather than a sudden daily move in crude.

Why cheaper crude may not mean cheaper petrol and diesel right away

Even with the decline in crude, industry experts cited in the report said petrol and diesel prices are unlikely to be cut immediately. One reason is that companies are prioritising financial stability, especially after a period of elevated costs. Dipal Dutta, CEO of RedoQ, said the fall offers relief for the economy but may not translate into lower retail prices any time soon.

Another factor highlighted by economists is the accumulated under-recoveries on the sale of petrol and diesel. As long as these losses remain a constraint, OMCs may choose to hold prices rather than pass through the full benefit of lower crude immediately.

The crude market backdrop: sharp cooling after mid-June

International crude prices eased sharply after Iran and the US signed a memorandum of understanding on 17 June to de-escalate the conflict. Brent crude touched a four-year low of around $10.37 a barrel on Thursday, down from a four-year high of $126.41 on 30 April.

At 7.55 pm, the September Brent contract was trading at $10.78 a barrel, down 1.09% from the previous close. The rapid move lower has changed the near-term risk balance from “more hikes likely” to “hikes may be capped”, but analysts remain cautious on how quickly pump prices could respond.

Indian crude basket below $10 and India’s import exposure

Official data cited in the report showed the average price of the Indian crude basket at $18.86 per barrel on June 27. That was the first time it slipped below $10 since the Iran-Israel conflict triggered a spike in global oil prices.

For India, the macro sensitivity is high because the country imports nearly 90% of its crude. A sustained move towards $10 to $15 per barrel is viewed by several economists as supportive for the economy, but the article also underlines that the consumer impact depends on OMC pricing decisions and the duration of lower crude.

Economists: inflation relief depends on pump price decisions

Economists cited in the report linked softer oil to a better inflation and growth outlook, but with an important qualifier. Devendra Kumar Pant, chief economist at India Ratings and Research (Ind-Ra), said CPI-based inflation is unlikely to ease unless OMCs reduce pump prices.

Sakshi Gupta, principal economist at HDFC Bank, said an eventual move of oil prices towards $10 per barrel over the coming months could reduce the pass-through from elevated energy costs and moderate imported inflation risk via greater rupee stability. But she also cautioned that disruptions can linger in the system for some time.

Under-recoveries remain a key constraint for OMCs

Crisil Intelligence estimated the cumulative under-recovery on petrol, diesel and liquefied petroleum gas during March to May 2026 at approximately Rs 1 lakh crore. The report added that if the Indian crude basket remains below $10 per barrel, under-recoveries are unlikely to increase materially from current levels.

This context helps explain why experts expect the early benefit of softer crude to show up first in government finances and OMC balance sheets, before reaching consumers through lower pump prices.

How retail fuel pricing is being described in the report

The report also noted that the cost for consumers is not simply a function of crude. It is linked to the international price of petrol and diesel, which in June were higher by 22% and 43%, respectively, even as crude started moderating.

That divergence can delay consumer relief. It also shapes how economists interpret a fall in crude prices: supportive for macro stability, but not a guarantee of immediate retail cuts.

What could happen next: timelines, risks, and buffers

Puri said oil prices are unlikely to sustain elevated levels for an extended period and are anticipated to decrease in the coming months, while warning that the situation could become “concerning” if the crisis in the Gulf escalates to other regions. He also said New Delhi has oil and gas reserves sufficient for 76 to 80 days.

Separately, the report mentioned that it can take 30 to 60 days for crude bought around $10 a barrel to reach India, reinforcing the idea that retail adjustments, if any, can come with a lag. Analysts also noted that a sustained decline to $10 is contingent on factors such as the US–Iran deal, free flow of oil through the Strait of Hormuz, and OPEC+ supply.

Key numbers at a glance

Conclusion

The minister’s remarks set a clear condition for any review of petrol and diesel prices: crude prices need to stay low and stable for the next two to three months, allowing higher-cost inventory to be worked through. At the same time, economists and industry experts cited in the report expect retail prices to remain unchanged in the near term, given accumulated under-recoveries and the lag between crude moves and consumer prices. The next key markers will be whether crude remains around current levels for weeks, and whether OMCs choose to use the relief to rebuild finances or begin passing it through at fuel pumps.