India’s Crude Oil Import Price Falls Below $70, But Fuel Price Relief Still Unlikely

India’s average crude oil import cost has dropped below $70 per barrel for the first time since the escalation of geopolitical tensions in West Asia earlier this year, with the Indian crude basket falling to around $68.86 per barrel. This marks a steep correction from levels that had previously surged above $150 per barrel during the height of the crisis, when supply fears and route disruptions pushed global oil markets into extreme volatility.

Despite the sharp decline in crude prices, consumers in India are unlikely to see immediate reductions in petrol and diesel prices. Sources indicate that state-run oil marketing companies are still focused on recovering significant losses incurred during the earlier period of high crude prices, when retail fuel rates remained largely stable to avoid burdening consumers.

India, which depends on imports for over 88% of its crude oil requirements, saw its state fuel retailers absorb heavy under-recoveries when global oil prices spiked. Even after partial government intervention through excise duty cuts of ₹10 per litre each on petrol and diesel, the sector continued to face financial stress due to prolonged volatility and supply disruptions.

Industry estimates suggest that oil marketing companies are currently earning a margin of around ₹5–6 per litre on petrol, while still facing losses of about ₹8–10 per litre on diesel, keeping overall profitability uneven. This imbalance has slowed down the transmission of falling global crude prices into retail fuel rates.

The government had earlier stepped in with substantial fiscal support, with estimated burden levels reaching nearly ₹1.23 lakh crore, including monthly revenue losses of around ₹14,000 crore due to duty reductions aimed at stabilising fuel prices during the crisis period.

Geopolitical instability, including temporary disruption risks in key shipping routes such as the Strait of Hormuz, had further intensified price swings earlier this year. However, with easing tensions and gradual normalisation of supply routes, global crude prices have now softened significantly.

Petroleum Minister Hardeep Singh Puri has previously noted that India’s diversified crude sourcing strategy and strategic reserves helped cushion domestic consumers from extreme global shocks. Even so, the impact of earlier losses and fiscal adjustments continues to delay the pass-through of lower crude prices to retail fuel rates, meaning any meaningful relief at the pump may take additional time to materialise.