🔥 Explosive Diwali Surprise: Massive Fuel Price Drop Imminent! You Won’t Believe What’s Happening

New Delhi: Despite petrol and diesel prices remaining unchanged across major cities in the country on Friday, there is an expectation of a reduction in fuel prices during the Diwali festival. This potential decrease in petrol and diesel rates, by approximately Rs 3-5 per liter, is anticipated around Diwali, coinciding with the commencement of critical state elections scheduled from November to December 2023. Earlier this month, domestic liquefied petroleum gas (LPG) prices were lowered, sparking speculation of a similar government move for petrol and diesel.

According to the domestic brokerage firm JM Financials, this anticipated decline in fuel prices is likely to occur primarily through a reduction in excise duty or value-added tax (VAT). This consideration is due to the challenges faced by oil marketing companies (OMCs) in their auto-fuel marketing business because of the current high crude oil prices, as reported by Live Mint.

This development comes as Saudi Arabia and Russia extend their voluntary oil output cuts until the end of the year, leading to a notable surge in international crude oil prices.

In a recent move, the Central government reduced the price of a domestic 14.2 kg LPG cylinder by Rs 200 per cylinder for all 330 million domestic LPG consumers, effective from August 30. This decision aimed to provide relief to the common man amidst the recent inflationary pressures. JM Financials remarked, “The government will bear the cost of this LPG price reduction, but it may enhance the working capital of OMCs, considering the usual delay in government compensation.”

Furthermore, there is strong speculation that the government may also lower petrol and diesel prices by INR 3-5 per liter around Diwali, in light of the upcoming key state elections starting from November to December 2023, as noted by the brokerage.

Additionally, investors anticipate that Saudi Arabia and Russia may extend their voluntary production cuts into October, although the unexpected three-month extension came as a surprise.

Meanwhile, US West Texas Intermediate (WTI) futures rose by $1.14, or 1.3 percent, settling at $86.69 per barrel on Tuesday, reaching a 10-month high. On the other hand, Brent crude futures traded approximately 0.2 percent lower at $90.41 per barrel, while US WTI futures showed a 0.2 percent decrease at $87.36. This decline was attributed to uncertainties surrounding demand from China, overshadowing the tightening supply in the global oil markets.

It’s important to highlight that despite crude oil reaching a peak of $140 per barrel in March 2022, OMCs did not significantly raise retail prices last year. As a result, oil refiners incurred losses as petrol and diesel rates remained unchanged since April 2022. However, the central government may exert pressure on OMCs to lower petrol and diesel prices, given their improved financial position due to stronger profits in the current fiscal year.

It’s worth noting that India ranks as the fourth-largest global energy consumer, following China, the United States, and the European Union. Additionally, India heavily relies on crude oil imports, meeting up to 85 percent of its energy needs through imports.

Leave a Comment