Nayara Energy has implemented significant fuel price cuts across its nationwide network, reducing petrol prices by ₹5 per litre and diesel by ₹3 per litre effective Wednesday, July 1. According to reports from PTI, Business Standard, Aaj Tak, The Times of India, and Mint, the revised rates have come into effect at all of Nayara's more than 7,000 fuel stations across the country. In Gurugram, petrol is now priced at ₹102.76 per litre at Nayara pumps, while diesel is sold at ₹95.58 a litre, as reported by petrol pump dealers. However, actual pump prices will continue to vary from state to state due to differences in local taxes, including value-added tax. The move comes after international crude prices retreated as hostilities in West Asia eased and the reopening of Strait of Hormuz restored the flow of crude oil and liquefied natural gas, easing concerns over disruptions to global energy supplies. Nayara Energy recently crossed the milestone of operating over 7,000 retail outlets, making it India's largest private fuel retailer backed by Russia's Rosneft. Other private fuel retailers like Jio-BP and Shell are yet to reduce prices following Nayara's lead.
Industry experts are divided on whether OMCs should immediately reduce fuel prices despite global crude oil prices falling to pre-war levels. DK Srivastava, Chief Policy Advisor, EY India, explained that a price cut and restoration of excise duties may be taken close to each other, with the government likely to restore excise duties on petrol and diesel ahead of any price reduction after making an assessment of its fiscal situation. Sourav Mitra, Partner – Oil & Gas, Grant Thornton Bharat, cited historical precedent, noting that when global crude prices fall sharply, the government has often increased excise duties to capture part of the benefit and support fiscal revenues. Ranen Banerjee, Partner and Leader, Economic Advisory, PwC India, pointed to other expenditures or taxes foregone by the government, stating that given the requirement for the government to continue with the capex push and impending pay commission related pressures on the fiscal that are on the horizon, the government could continue with the higher prices. Mitra estimates that a retail price reduction is more plausible in the second half of 2026, contingent on crude trading comfortably below $70-75 per barrel and OMC under-recoveries narrowing substantially. Asked whether the decline in crude prices would translate into lower petrol and diesel prices, Oil Minister Hardeep Puri said it would be a 'legitimate thing' if international oil prices stayed low for the next few weeks.
State-owned fuel retailers are facing significant financial pressure despite the recent price decline. Union Petroleum and Natural Gas Minister Hardeep Singh Puri revealed that state-owned fuel retailers incurred losses of about ₹74,781 crore on the sale of petrol, diesel and LPG in the three months ended June as they absorbed the impact of elevated global crude oil prices triggered by the West Asia conflict. Addressing reporters, Puri explained that oil companies typically procure crude oil around two months in advance and are currently processing cargoes bought in April and early May, when international prices were substantially higher. The average price of the Indian basket of crude oil stood at $114.48 per barrel in April, $106.23 in May and $83.22 in June, before declining sharply to $68.28 per barrel as on July 1. Industry estimates suggest that at crude prices sustained around $75/barrel, OMCs would begin to recover past losses over a 6-12-month horizon. DK Srivastava, Chief Policy Advisor, EY India, explained that adjustments to retail prices came only after substantive increases in the price of Indian Crude basket, with OMCs taking quite some time to reach breakeven levels. If retail prices are cut prior to that, it will call for large subsidies which will add to the fiscal burden of the government.
The fuel price cut comes alongside several other significant changes in India's energy sector, including reduction in commercial LPG cylinder prices by up to ₹183.5 across major cities, while domestic LPG cylinder prices remain unchanged. According to Finance Ministry notifications, the Centre has revised the windfall tax on petroleum product exports, increasing the Special Additional Excise Duty (SAED) on petrol exports to ₹4 per litre from ₹1.5 per litre earlier, while export duty on diesel has been reduced to ₹8.5 per litre from ₹14 per litre. Similarly, the levy on ATF exports has been cut to ₹7.5 per litre from ₹12.5 per litre. The government also exempted PSU OMC exports to Mauritius and the Maldives from these levies, expanding the exemption list beyond Nepal, Bhutan, Bangladesh and Sri Lanka to six countries. On Wednesday, state-run OMCs reduced the price of a 19-kg commercial LPG cylinder by ₹183.50, with it now priced at ₹2,930 in the national capital. Jet fuel prices have also been reduced by ₹5,000 per litre with effect from Wednesday, with aviation turbine fuel sold at ₹1,10,000 per kilolitre in Delhi. DK Srivastava of EY India advocates for establishing an 'Oil Price Stabilization Fund', noting that India used to have oil price stabilization funds called 'oil pool account' funds in the 1990s, which was discontinued in 2002.
The price reduction comes as global crude oil prices have fallen to pre-war levels, with Brent crude trading at $72.16 per barrel, down 1.08% from its previous close, and West Texas Intermediate at $69.16, lower by 0.49%. As reported by PTI, Business Standard, Aaj Tak, The Times of India, and Mint, this marks the first reduction in retail fuel prices by any company in more than two years. Nayara had previously increased petrol prices by ₹5 per litre and diesel by ₹3 per litre in March after geopolitical tensions in West Asia drove global crude prices sharply higher. The latest reduction effectively reverses Nayara's earlier increase and is the first signal of lower fuel prices reaching Indian consumers after global oil markets stabilised in recent weeks. The Indian crude oil basket is also nearing pre-war levels, currently standing at $70.58 per barrel, compared to the June average of $83.22 a barrel. Oil prices fell for a third straight session on Thursday as crude shipments through the Strait of Hormuz continued to recover and investors remained optimistic that indirect negotiations between the US and Iran could reduce the risk of further supply disruptions. The Middle East conflict has exposed the vulnerability of India's oil supply and its pricing, with experts suggesting a focus on 'strategic pricing reserves' as much as strategic petroleum reserves.
