In response to the ongoing conflict in West Asia, the Indian government has reduced the excise duty on petrol and diesel.
Key Details of the Excise Duty Reduction
The excise duty on petrol has been reduced from Rs 13 per litre to Rs 3 per litre. This marks a significant reduction of Rs 10 per litre. Similarly, the excise duty on diesel has been cut from Rs 10 per litre to Rs 0 per litre, also a reduction of Rs 10.
Global Oil Prices and Their Impact
This decision comes at a time when global crude oil prices remain volatile due to the West Asia conflict. As of 8:40 am, Brent crude traded at $106.63 per barrel, down by 1.28%, while WTI crude stood at $93.50 per barrel, lower by 1.04%.
US-Iran Talks Bring Relief to Oil Markets
Late comments from US President Donald Trump suggesting “very good” talks with Iran and a pause in attacks helped calm oil market concerns. This easing of tensions in West Asia has led to some cooling of crude prices, relieving pressure on countries like India that depend heavily on oil imports.
A Step Toward Protecting Consumers
The excise duty cut aims to pass on some relief to consumers and manage the risk of rising fuel prices. Oil Minister Hardeep Singh Puri highlighted that international crude prices surged sharply in the past month, rising from $70 per barrel to nearly $122 per barrel.
He added that the government had to decide whether to pass the full impact to consumers or absorb part of the shock. The duty cut reflects an effort to protect Indian consumers while easing pressure on oil marketing companies, which have been facing significant losses.
Oil Marketing Companies and Their Stock Performance
Shares of oil marketing companies like Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL), and Indian Oil Corporation (IOC) have been in focus after this announcement. HPCL shares rose by 2.5%, BPCL gained 0.9%, and IOC was up by 1.4% in the previous trading session.
Despite these gains, these stocks had faced pressure in recent weeks. HPCL had earlier touched its 52-week low, while BPCL and IOC are trading below their 52-week highs. The excise duty cut could impact their margins and business outlook, depending on fuel prices and crude costs in the coming days.
Broad Market Sentiment Shows Improvement
The broader market mood has improved with easing crude prices, leading to buying across sectors. This has supported stock prices across the board. Investors are closely monitoring the developments in the West Asia conflict, which continue to affect oil prices, inflation, and overall market direction.
A Balancing Act in Managing Fuel Costs
The reduction in excise duty is seen as a step to manage fuel costs and support consumers. However, global factors remain uncertain, making the situation fluid. The government’s decision to cut excise duty seeks to ease the financial burden on citizens during these challenging times.
