Fuel prices unlikely to come down despite excise Duty Cut On Petrol, Diesel

New Delhi/Guwahati: Despite the Centre slashing excise duties on petrol and diesel on Friday, fuel prices are unlikely to come down at retail outlets as oil marketing companies (OMCs) are expected to absorb the benefit to offset mounting losses caused by the global oil crisis.

Under the revised structure, central excise duty on petrol has been reduced to Rs 3 per litre while diesel has been brought down to zero.

The move comes amid a sharp surge in global crude prices following the ongoing US-Israel war on Iran and the blockade of the Strait of Hormuz, a key global energy supply route.

Industry sources indicate that OMCs are currently losing around Rs 48.8 per litre on petrol and diesel sales due to the spike in Brent crude prices, which have crossed the $100 per barrel mark. As a result, the excise duty reduction is likely to provide financial relief to oil companies rather than translate into immediate price cuts for consumers.

The decision follows a recent price hike by Nayara Energy, the country’s largest private fuel retailer with an 8.4 per cent market share, which increased petrol and diesel prices by Rs 5.3 and Rs 3 per litre respectively, highlighting the pressure on fuel retailers.

The ongoing conflict in West Asia has severely disrupted global oil and gas supply chains. The Strait of Hormuz, through which nearly 20–25 million barrels of crude oil and about 10 billion cubic feet of gas pass daily, remains a critical artery for global energy movement. India, which imports nearly 40–50 per cent of its crude oil through this route, is particularly vulnerable to supply disruptions.

In addition to crude oil, India also depends heavily on liquefied natural gas (LNG) imports from countries like Qatar and the United Arab Emirates, further increasing the economic impact of the crisis.

Officials and industry experts say the excise duty cut is primarily aimed at stabilising the domestic fuel supply system and preventing further financial stress on OMCs rather than providing immediate relief at fuel stations. Consumers may see price reductions only if global crude prices ease and supply routes through the Strait of Hormuz stabilise in the coming weeks.

The development underscores how geopolitical tensions in West Asia are directly impacting India’s fuel economy, with the government balancing between protecting consumers and ensuring the financial viability of oil marketing companies.

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