New Delhi, May 1 Public sector oil companies on Thursday slashed the price of commercial LPG by Rs 14.50 per 19-kg cylinder while the price of jet fuel for airlines was cut by 4.4 per cent.
The price of Aviation Turbine Fuel (ATF) was reduced by around Rs 3,954.38 per kilolitre (1,000 litres) to Rs 85,486.80 per kl, which will come as a shot in the arm for commercial airlines such as Air India and IndiGo as fuel accounts for around 30 per cent of their operational costs.
The price cut follows a steep 6.15 per cent (Rs 5,870.54 per kl) reduction effected on April 1. These two reductions have effectively offset the price increases that occurred earlier this year.
The reduction in fuel prices comes against the backdrop of crude oil prices having fallen to a four-year low in the global market with the benchmark Brent crude hovering at around to $63 a barrel, the lowest since April 2021.
Oil prices have declined as demand has declined amid the global slowdown. Oil prices have slumped as demand has declined amid the global slowdown. Saudi Arabia, one of the world's biggest oil producers, has also indicated that it won’t shore up oil prices with any more supply cuts as it is ready to face a prolonged period of low prices. This is expected to come in the way of the OPEC oil cartel from influencing prices.
The decline in oil prices augurs well for the Indian economy as the country imports around 85 per cent of its crude requirement, and any decline in oil prices leads to a reduction in the country’s import bill. This, in turn leads to a lowering of the current account deficit (CAD) and strengthening of the rupee.
India is currently the third-largest importer of oil.
Apart from strengthening the external balance, a decline in oil prices also leads to lower prices of petrol, diesel and jet fuel in the domestic market, which eases inflation in the country.
To raise more resources, the government had last month increased the excise duty on petrol and diesel, which is being borne by the public sector oil companies - Indian Oil, Bharat Petroleum, and Hindustan Petroleum.
Minister for Petroleum and Natural Gas Hardeep Singh Puri stated that the government-owned oil marketing companies will absorb the increase in excise duty on petrol and diesel, as their input costs have come down due to the decline in crude oil prices in the global market.
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