Petrol-diesel is becoming cheaper in international market … Then why did Modi government increase the price!

Petrol Diesel Price Hike: The Modi government announced to increase the price of petrol and diesel on Monday, 7 April 2025. The central government has increased by Rs 2 on petrol and diesel. The new rates on petrol and diesel will be applicable from 12 noon. The biggest thing is that this decision has been taken at a time when crude oil prices have reached the lowest level of three years worldwide.

Cheap crude oil

Talking about last week, the price of crude oil fell to $ 62 per barrel, which is the lowest rate since August 2021. The reason for this decline is the possibility of global economic recession and decrease in demand for oil. On Monday, the price of Brent crude was $ 63.23 per barrel, while the US’s Nymex crude fell 10 per cent to $ 62. Also, Saudi Arabia has reduced the price of its major grade ‘Arab Light’ for Asia for the second consecutive month. OPEC+ countries have also relaxed production cuts from this month, which can increase the supply in the market.

Questions arising in the country

On the one hand, the Government of India has increased oil prices, on the other hand, questions are being raised in the country that when the oil has become cheaper in the international market, then why the prices of petrol and diesel are not decreasing in India. According to the business line report, Congress leader Manish Tiwari also asked the government whether ‘dynamic pricing’ applies only when prices rise? The general public is also hoping that now the prices of petrol and diesel will decrease, but no clear indication has been received from the government so far. In contrast, the prices of petrol and diesel have been increased further.

Oil companies are earning money

The fall in crude oil prices is also affecting India’s oil companies. This can prove to be beneficial for oil marketing companies (OMCs) like Indian Oil, HPCL and BPCL, as their auto fuel marketing margin has reached Rs 13 per liter, which is usually between Rs 3.5 to 6.2 per liter. But if the government increases excise duty or reduces retail prices, then the profits of these companies may be affected.

Harmful for these companies

This decline can be harmful for companies like ONGC and Oil India. According to JM Financial, every $ 1 decline may reduce the income (EPS) of these companies by 1.5-2 percent. Also, if the price of oil remains below $ 70, then the investment of American shell oil companies will also be affected as their break-even price is $ 60-65 per barrel. At the same time, Saudi Arabia can also suffer losses, because their budget is balanced at the rate of $ 85 per barrel.

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