The significant fall in global crude prices will allow oil marketing companies' (OMCs) to cut petrol prices by Rs 1.60-1.70 per litre and also lower diesel price by Rs 2.4-2.5 per litre, reports CNBC-TV18's Nayantara Rai.
US crude prices fell close to 11-year lows at USD 36.31 a barrel on Monday.
Both US and global benchmark Brent crude have been plummeting since an OPEC meeting on December 4 at which the oil-producing countries removed their production ceiling, thereby exacerbating global crude oversupply. Monday's close (USD 36.31) marked the first significant rebound since the meeting.
The OMCs may breakeven even if they cut petrol and diesel prices. Furthermore, the Finance Ministry may hike excise duties on the fuel if the entire benefit is not passed on the consumers.
Also with crude prices hovering around USD 35 barrel mark, ONGC and Oil India are staring at the prospect of negligible margins.
Petroleum Minister Dharmendra Pradhan has asked the finance minister to come out with a new ad valorem formula for cess and move away from the fixed system of paying USD 9 per barrel.
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