Govt. Set to Review Petrol and Diesel Prices Every 15 Days
India's government will now review petrol and diesel prices every 15 days based on international market conditions, ensuring direct benefits for consumers amidst volatile crude oil prices due to geopolitical tensions.
Highlights
- •Government to review fuel prices every 15 days
- •Geopolitical tensions cause sharp increase in crude oil prices
- •India imports 40-50% of its crude oil through the Strait of Hormuz
- •Retail petrol and diesel prices will remain unchanged for now
Following a significant reduction in the Special Additional Excise Duty (SAD) on petrol and diesel, the Indian government has initiated a new policy to address fluctuating global crude oil prices. The central government will now assess fuel prices every 15 days based on international market conditions.
This step aims to ensure direct benefits for the common man by aligning domestic prices with changes in the international price of crude oil. The government clarified that this reduction will not affect retail petrol and diesel prices, which will remain unchanged at least for now. After reviewing fuel rates every 15 days, further adjustments can be made if necessary.
Crude Oil Market Volatility
The decision comes in response to ongoing geopolitical tensions in the Middle East, particularly the conflict between the US, Israel, and Iran. The Strait of Hormuz, a key passage for global crude oil supply, faces significant disruptions. As a result, benchmark Brent crude prices have risen from $68 per barrel on February 28 to over $100 by March 7.
Crude oil supplies are critical for India's energy sector as the country imports approximately 40-50% of its crude oil through this route, impacting not just petrol and diesel but also liquefied natural gas (LPG) and other essential commodities. Despite these concerns, government officials have assured the public that there is no immediate shortage of oil or gas supplies in India.
Vivek Chaturvedi, Chairman of the Central Board of Indirect Taxes and Customs, explained, "Prices of crude oil, petrol, diesel, and aviation turbine fuel (ATF) are experiencing sharp fluctuations. The government has taken a calibrated approach to control these changes." Special additional excise duty and cess have been imposed on diesel and ATF to manage their export. This move is part of the broader strategy to ensure that any changes in global crude oil prices directly benefit consumers.
