Abstract：The prospect of a US-Iran peace agreement and the reopening of the Strait of Hormuz have pushed crude oil prices sharply lower, with WTI falling to around $80 per barrel and Brent crude to about $83.82. The easing of geopolitical tensions has raised hopes of lower fuel costs, especially for India, which relies heavily on oil imports through the Strait. However, despite crude prices retreating from their recent highs, petrol and diesel prices in India remain elevated. Oil Marketing Companies (OMCs) are using the benefit of lower crude prices to recover earlier losses rather than immediately cutting retail fuel prices. As a result, consumers may have to wait longer before seeing any relief at the pump.
As soon as the news of the US and Iran reaching a consensus on a peace agreement to end the conflict in the Middle East and the reopening of the Strait of Hormuz emerged, the crude oil prices started dropping. Now, as we are in the middle of June 2026, the West Texas Intermediate (WTI) crude oil has plunged to approximately $80 per barrel. On the other hand, Brent Crude prices declined nearly 4% to approximately $83.82 per barrel.
The renewed confidence in global energy supplies owing to the agreement, which is yet to be signed, has ignited hopes of lower fuel prices globally, including in India, the third largest oil importer worldwide. Most of its crude oil and LPG imports come through the Strait of Hormuz. The easing of tensions and reopening of this shipping route will likely improve supply and curb Indias import costs.
As a matter of fact, Oil Marketing Companies (OMCs), taking cues from global crude oil price surges, have been consistently raising the prices of petrol, diesel and LPG over recent months.
But crude oil prices have largely been declining since mid-May after touching the war-induced high of around $120 per barrel. Despite this, why are petrol and diesel prices in India climbing high with no stop to it? While the common man is reeling under high prices, the OMCs have their own reason to keep prices elevated. So, whats the fuss? This article will reveal all that and more. Keep reading!
Contents
Petrol Prices Fly Above INR 100/Litre Across Most Cities in India
Yes, it has been the case with most cities recording a petrol price of above INR 100 per litre. At the same time, diesel prices, which largely remained slightly sub-100 per litre, have breached this level in some places. The 14.2 Kg LPG cylinder is hovering around INR 1000.
The table below shows the existing fuel prices across different cities in India.
Note - Prices sourced from core
$1 Per Barrel Crude Oil Price Reduction Cuts Petrol, Diesel Prices by 50-60 Paise Per Litre, but Will Consumers Get Relief?
Despite the likely improved economics for OMCs amid falling crude oil prices, consumers may still have to wait for lower fuel price benefits. As the government didnt pass on the entire price rise to consumers, it will likely hold prices at current levels to ensure OMCs recover some of their losses before contemplating a reduction, according to market experts. Also, the crude oil price decline needs to be sustained for OMCs to release benefits to consumers. Some experts also believe that the crude oil price needs to be around $60-72 per barrel so that OMCs can pass on the benefits to consumers. They feel that crude prices at $80 are still very high for an immediate cut in retail fuel prices. OMCs would first absorb lower crude oil prices to offset losses accumulated while selling fuel below prevailing costs for some months recently.
According to Thomas Stephen, Director & Head - Preferred, Anand Rathi Shares and Stock Brokers, a $1 per barrel of crude oil price reduction usually translates into petrol and diesel prices going down by 50-60 paise per litre. A week ago, crude oil price, which hovered around $90-94 per barrel, is down to $80 per barrel (approx.). Going by this mathematical logic, the price should have been cut by INR 3-5 per litre. However, the lower price is being used by OMCs to recover their earlier losses.
Okay, High Petrol & Diesel Prices are Here to Stay, But Will the Falling Crude Prices Not Benefit Anyone?
While petrol and diesel-powered vehicle owners may not receive immediate benefit, lower crude prices will likely create opportunities across several sectors of the Indian economy, with companies consuming large quantities of raw materials and commodities likely to be part of the beneficiary list.
Another major winner from this falling price is the airline players as fuel accounts for a massive share of their operating costs.
Paint manufacturers will also likely flourish from the potential fall in raw material prices due to the declining crude costs.
Other industries to benefit from this include Fast-Moving Consumer Goods (FMCG), transport, logistics and automobiles.
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