Global crude oil prices have crashed. But why has it not impacted fuel prices in India?

• US crude rates plunged below the $0 mark into negative territory for the first time in history and benchmark Brent touched multi-year lows of $26 a barrel

• Despite a global crash in crude oil, petrol price in Delhi continued to be at Rs 69.59 per litre for the 36th day

New Delhi: The morning of April 21 will be recorded as a singular moment in the history of the energy sector as the world witnessed an unprecedented crash in global crude oil prices with US crude rates plunging below the $0 mark into negative territory for the first time in history and benchmark Brent touching multi-year lows of $26 a barrel. This essentially means that sellers were paying buyers to take deliveries in a bid to avoid incurring storage cost with demand for oil falling globally in the aftermath of the COVID pandemic.

However, the historic event has had no impact on the retail prices of petrol and diesel in India. Despite a global crash in crude oil, petrol price in Delhi continued to be at Rs 69.59 per litre for the 36th day, while diesel prices stood at Rs 62.29 per litre. In fact, few cities like Mumbai, Bengaluru and Kolkata have seen a hike in fuel prices due to increase in VAT by some state governments.

Why global crude oil crash has had no impact on fuel prices?

Crude oil is usually purchased by refiners two months ahead in time before it is made available in the market. Data sourced from the Petroleum Ministry showed that the cost of Indian basket of crude was at $20.56 a barrel on April 17. So, taking into account the time lag, fuel prices may fall only from May, if at all.

Refinitiv Oil Research: OMCs would maintain prices for as long as possible

Commenting on the unprecedented fall in global crude oil prices, Refinitiv Oil Research's director Yan Chong Yaw told Livemint: "Despite the sharp fall in crude prices, international refined product prices have also fallen sharply; with margins for gasoline and jet fuel at negative levels while diesel margins are at multi-year lows of under $6/bbl. Domestic margins are now better than international ones, hence the OMCs would strive to maintain prevailing price levels as long as possible."