Kolkata: Crude oil prices have begun cooling in welcome relief as US President Donald Trump said the war with Iran could be “over soon”, said reports. Asian stocks too recovered in early trade on Tuesday, March 10. Brent crude futures declined by about 10% to below $90 per barrel.
As the missiles rain on in and around Iran, 2,500 km away, the immediate concern for most Indians is whether price of petrol and diesel can manage to avert a rise. The prices of LPG cylinders have been revised upwards already — Rs 60 for the domestic cylinders and Rs 114.50 for the commercial ones. On Monday, crude prices moved up to $115 per barrel on Monday as there were no signs of easing of the conflict between Iran and the US-Israel combined. However, prices have cooled to around $100 after G7 countries planned to meet and discuss whether oil can be released from their strategic petroleum reserve pool.
India’s strategic petroleum reserve is partly filled, said reports, which also said that New Delhi is not likely to participate in a G7 proposal for a joint release. The crude prices has made life difficult for the oil market companies which are not being able to buy the barrels to replace. After the war started, Iran ordered a closure of the Strait of Hormuz, the channel which passes by the country and through which 20% of the global maritime transit of crude oil passes and which accounts for about 50% of Indian crude requirements.
Above $115 per barrel
Brent crude price, which serve as international benchmark, quickly moved past $115 per barrel on Monday as indications became clear that the conflict is not going to stop immediately and can continue for some time. Reports said the prices cooled to about $100 later as reports said G7 group planned a coordinated action to ease the situation by a joint release from the strategic reserves. Indian refiners are scrambling to buy Russian crude oil which is available at a discount. The 30-day window that the Donald Trump administration has allowed India to buy from Russian tankers in the high seas has given some leeway to procure some crude at a discount.
Absorb the losses now
Reports quoting officials indicated that the government will not want the oil marketing companies to go in for prices rise, which has the potential to stoke an all-round price rise. The state-owned oil market companies, IOC, HPCL and BPCL, will be suffering very low of negative marketing margins, reports said, though it could be offset partially by positive refining margins.
Marketing margin for oil marketing companies is the profit earned by selling a litre of fuel and it represents the difference between procurement costs and retail selling prices. On the other hand, refining margins signal the profit an OMC makes from converting crude oil into petrol, diesel and jet fuel. These margins are the difference between the total value of refined products and the cost of crude oil.
OMC profits in Q3FY26
The government expects the OMCs to absorb the losses now, while India frantically continues to search for crude oil from different suppliers around the world. Repost indicate that IOC, BPCL, and HPCL more than doubled their cumulative Q3 profit to Rs 23,743 crore, compared to what it was in the Q3 period of FY25. However, they also said that even after the rise of Rs 60 in the price of domestic LPG cylinders, OMCs could need government support. Experts also pointed out that if the crisis persists, the government can also consider lowering taxes on petrol, diesel and ATF, which constitute a large part of retail fuel prices, though it would mean jeopardising the revenue inflow, and thereby deficit projections.