After staying above USD 100 per barrel for two weeks, international oil prices fell to USD 99.84 on Tuesday, easing margin pressure on fuel retailers who have been holding petrol and diesel prices despite a spike in the cost of raw material. Brent crude oil prices, which soared past USD 100 per barrel on February 28 and touched a 14-year high of USD 139 per barrel on March 7, fell over 7 percent on Tuesday.

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The market was rattled by a resurgence of virus cases in China, which may impact demand in the world's biggest crude importer, and signs of progress in cease-fire talks between Ukraine and Russia.

International oil prices, which shoot up since Russia invaded Ukraine, have swung about USD 40 per barrel in little more than a week. For India, the fall in oil prices is good news as it will lower the import bill of the world's third-biggest oil importer.

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It will also ease margin pressure on state-owned fuel retailers, industry sources said. Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) haven't changed petrol and diesel prices for a record 131 days. This is despite the cost of raw material jumping over 60 percent.

The companies were expected to end the election-related freeze on fuel prices once polling in five states including Uttar Pradesh ended last week but they continued to keep rates on hold to not give the opposition any issue to corner the government in the second half of the budget session of Parliament that started on Monday.

"The fall in crude oil prices is certainly a welcome sign for oil companies," a senior official said. "They were losing Rs 12-13 a litre, without considering marketing margin, on sale of petrol and diesel. This will now come down." International oil prices were around USD 81 when the companies hit the freeze button on November 4.

Oil Minister Hardeep Singh Puri on Monday told the Rajya Sabha that the price of petrol and diesel at the retail point or at the bunk is determined by international price, cost of insurance, freight, exchange rate, refining margins and a number of other factors. "Oil marketing companies will take their decisions (on fuel prices). They will proceed once they can no longer bear it. If they don't have the margin or cushion, they will take the appropriate step," he had said as he denied suggestions that the firms were holding the prices on government instructions so as not to spoil the ruling BJP's electoral prospects in five states that went to polls.

On November 4, 2021, excise duty on petrol was cut by Rs 5 per litre and that on diesel by Rs 10 to provide relief to consumers reeling under record-high prices. All but nine states had also cut local sales tax or VAT. "We are willing to take such steps as are necessary to control the price," he had said.

First Published:Mar 15, 2022 9:21 PM IST