(HT)
India’s average crude oil import price fell 42-month low to about $71.20 a barrel in the first fortnight of March primarily because of the Chinese slowdown, the US efforts for ceasefires in ongoing conflicts and President Donald Trump’s resolve to boost American oil output.
India, which imports over 88% crude oil its processes, had last witnessed average monthly oil import price of the Indian basket below $70 a barrel in August 2021. Since then, monthly average saw an upward movement due to various geopolitical and economic reasons that was aggravated by the Ukraine war in early 2022, followed by Hamas terror attack on Israel in October 2023.
India’s current annual average crude import price is also lowest since 2020-21. The average price in the current financial year up to March 15, 2025 is $78.49 per barrel, according to the data. The annual average of Indian basket was $44.82 a barrel in 2020-21, which rose to $79.18 a barrel in 2021-22, peaked at $93.15 in 2022-23, and remained high at $82.58 a barrel in 2023-24 before falling to $78.49 in FY25.
According to government’s data, average price of Indian basket started rising from $69.80 per barrel in August 2021, surged to $112.87 a barrel in March 2022, and peaked at $116.01 in June 2022. After falling marginally to $105.49 in July 2022, the monthly average crude price of Indian basket remained below $100 a barrel subsequently.
Petroleum sector experts said India’s retail prices of petrol and diesel are not aligned with the international market, and private refiners are having a margin of about Rs 10-12 per litre on the two automobile fuels. In all likelihood global oil prices are expected to remain subdued in coming months, they said requesting anonymity.
Reserve Bank of India’s monetary policy committee had a similar observation.
“Globally commodity prices are softening due to several factors. The crude oil prices are likely to head downwards due to the Chinese slowdown, the recently announced ceasefire in the Middle East with the prospects of the Ukraine conflict also brightening with the Trump 2.0 Presidency which is also likely to enhance the US output of oil and growing dependence on renewables,” the minutes published on February 21, said.
Recently, President Trump has also requested OPEC to lower oil prices in order boost economic growth, SC Sharma, an energy expert and former officer on special duty at the erstwhile Planning Commission said.
“If we have a look at the Trump 1.0 tenure, the oil prices (Indian Basket) between 2017-2021 averages at US$ 57.75 per barrel. Looking at various forecast, it is expected that the oil prices may range between US$ 65 to US$ 73 per barrel during 2025-26 and beyond,” he said.
Sharma said oil marketing companies should reduce petrol and diesel rates now. Indian oil firms have not aligned petrol and diesel rates with international market since March 2022, except for a Rs 2 per litre cut on March 15, 2024. Petrol and diesel are sold at Rs 94.72 a litre and Rs 87.62 in New Delhi market since mid-March last year.
“Given the fact that oil prices (Indian basket) have come down from an annual average of US$ 93.15 per barrels in 2022-23 to 78.50 per barrels in 2024-25, there is a need for reduction in both petrol & diesel prices,” he said.
Recently, over the year, global refining margins have also been highly subdued.
Also, crude oil and petroleum product markets have stabilised to a large extent post Ukraine and Russia war.
Since almost three years, oil companies have not switched to market-based petrol and diesel prices, he said.
“Given the oil price declined over last 2-3 years and are further expected to decline over next few years, the oil companies are required to switch to daily market price mechanism, or else government should adjust the excise levy’s on these products to balance the prices,” he said.
