The financial burden on oil marketing companies (OMCs) has eased significantly following fuel price revisions and government support measures, while global crude oil prices plunged nearly 5 per cent after the United States and Iran announced a peace agreement and the reopening of the Strait of Hormuz.
According to data shared by Sujata Sharma, Joint Secretary in the Ministry of Petroleum and Natural Gas, under-recoveries on petrol have fallen by 83 per cent to Rs 3 per litre from Rs 24 per litre recorded on April 1.
Diesel under-recoveries have also declined sharply by 75 per cent to Rs 27 per litre from Rs 105 per litre during the same period.
The reduction follows four rounds of fuel price hikes implemented by the Centre in May, along with fiscal support provided to oil retailers amid elevated global crude oil prices.
Under-recoveries had dropped to around Rs 600 crore per day in May after the fourth fuel price revision, improving further from nearly Rs 750 crore per day reported on May 18.
The government had approved an average fuel price increase of Rs 2.7 per litre during the last week of May, a move expected to reduce overall OMC losses by at least 44 per cent.
The phased revisions on May 15, 19, 23 and 25 pushed petrol prices in Delhi from Rs 94.77 per litre to Rs 102.12 per litre, while diesel prices rose from Rs 87.67 per litre to Rs 95.20 per litre.
The Centre also absorbed a significant portion of the burden by cutting excise duties on petrol and diesel. According to the government, the decision resulted in a revenue sacrifice of nearly Rs 1.23 lakh crore over 78 days, helping shield consumers from the full impact of rising fuel costs.
Crude oil prices tumble after US-Iran agreement
Meanwhile, global crude oil prices declined sharply on Monday after US President Donald Trump announced that Washington and Tehran had reached a peace agreement and that the Strait of Hormuz would reopen.
International benchmark Brent crude fell as much as 4.9 per cent to $83.05 per barrel in early trade, while US West Texas Intermediate (WTI) crude dropped 5.74 per cent to around $80 per barrel.
Trump announced on Truth Social that the agreement with Iran had been completed and authorised the reopening of the Strait of Hormuz, a critical maritime route that carries nearly one-fifth of the world's crude oil supplies.
"I hereby fully authorise the toll-free opening of the Strait of Hormuz and, simultaneously, the immediate removal of the United States naval blockade. Ships of the World, start your engines. Let the oil flow!" Trump wrote.
According to reports, the United States and Iran are expected to formally sign a memorandum of understanding in Switzerland later this week.
The easing of geopolitical tensions boosted sentiment across global financial markets. Asian equities rallied sharply, with major indices such as Japan's Nikkei, South Korea's KOSPI, Hong Kong's Hang Seng and Indonesia's Jakarta Composite posting strong gains.
Back home, Indian benchmark indices also reacted positively, with the Sensex and Nifty rising more than 1 per cent as lower crude prices improved the outlook for inflation, corporate earnings and the broader economy.
