India’s fuel prices will remain elevated for some time despite the declining international crude prices, according to India’s Union Minister of State for Petroleum and Natural Gas, Suresh Gopi.
Indian drivers will not see immediate relief at the pump as fuel retailers will need time before starting selling cheaper diesel and gasoline, Gopi said on Thursday, as quoted by Indian media.
There will be a lag between the current slide in international crude oil prices and the refiners and retailers obtaining the cheaper crude supply, the official said.
“It will take time as the cheaper crude has to be transported to India via Strait of Hormuz, which will see an excessive traffic of ship movement. So things will have to be normalized,” the union minister told reporters today.
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The international crude markets are betting on normalization sooner rather than later, with Brent Crude prices falling to a three and half-month low below $80 per barrel this week as the United States and Iran signed the memorandum of understanding to launch 60-day negotiations and reopen the Strait of Hormuz.
Since the beginning of the war at the end of February, Indian fuel retailers have raised gasoline and diesel prices on four separate occasions.
After holding fuel prices unchanged for about two months, Indian fuel retailers hiked prices four times in May as they and the federal government were absorbing hefty losses from importing expensive crude while selling fuel at low prices.
Just as the U.S. and Iran announced a deal to make a deal, India was already scrambling to contain the economic and financial impact as high oil prices weighed on the Indian currency, economic growth, and public finances.
The slump in international prices is a welcome relief for India’s energy import bill and public finances, but drivers in the world’s most populous country will have to wait at least a few more weeks to see relief at the pump.
By Charles Kennedy for Oilprice.com
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