The Ministery of Petroleum and Natural Gas has announced that State-owned oil marketing companies have cut the prices of petrol and diesel across the country by Rs 2. New prices have come into effect from today March 15, 6 am.

Following the revision, petrol prices now start at Rs 94.72 per litre in Delhi, while Diesel is priced at Rs 87.62 per litre. In Mumbai, one litre of petrol and diesel costs Rs 104.21 and Rs 92.15, respectively.

The much-awaited reduction in petrol and diesel prices, which have remained unchanged since May 2022, will help reduce the hit on motorists’ wallets and also reduce operating costs for scores of vehicles across India.

The announcement on price comes ahead of the Lok Sabha elections, which is scheduled for April-May. Recently, Indraprastha Gas Ltd and Mahanagar Gas reduced the prices of compressed natural gas by Rs 2.50 per kilogram.

India is the world’s third-largest consumer of crude oil, and imports more than 85% of its crude oil requirements. So, the prices of petrol and diesel are linked to international benchmarks. The retail prices of the fuels also depend on factors such as exchange rate, shipping charges, inland freight, refinery margin, dealer commission, central taxes, and state value-added tax.

State-owned oil marketing companies follow the dynamic fuel pricing model, by which they should revise the fuel prices daily based on a 15-day rolling average of international benchmark prices. However, Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp, which control around 90% of the fuel retail outlets, have not revised the prices since April 2022.

Though crude oil prices have dropped to the range of US$85 per barrel from over USD 100 in 2022, their volatility continues amid unpredictable geopolitical situations in some regions and production regulations. For instance, in September crude was trading at over USD 95 per barrel.

The last revision in petrol and diesel prices was in May 2022, when the central government slashed the excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre.