Petrol, diesel prices could come down soon: Govt mulling Rs 4-6 a litre cut, say sources

Petrol price cut: With the Lok Sabha elections likely in the first half of 2024, Prime Minister Narendra Modi-led Centre is considering a cut in the prices of petrol, diesel soon, government sources told Business Today TV on Thursday.

The price reduction is likely to be in the range of Rs 4-Rs 6 per litre, said sources.

Discussions are on with Oil Marketing companies to provide the relief to common man and a proposal is under consideration for government and OMCs to bear equal burden of price cut, the sources added.

Centre might also mull higher price cut of up to Rs 10 per litre. A fuel price cut will also dampen the retail inflation that rose to a three-month high of 5.55% in November.

Petroleum Ministry and Finance Ministry held discussions recently and submitted options to Prime Minister's Office regarding this. These two ministries hold discussions every fortnight on fuel prices.

Sources said Union government is in favour of fuel price cut as crude oil prices have been hovering in the range of $70-$80 per barrel for last three months.

Central government has reduced Central Excise duty by a total of Rs 13 per litre and Rs 16 per litre on petrol and diesel, respectively, in two tranches in November 2021 and May 2022. The excise reductions were fully passed on to consumers and retail prices fell as a result.

Low crude oil prices have yielded large profits for the three government-run oil marketing companies -- Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) -- in FY24.

Oil prices steadied on Thursday, with Brent trading near $80 a barrel as higher inventories and record output in the United States overshadowed jitters over global trade disruptions in the Red Sea.