Topic 4: CRUDE OIL: VICTORY SUPPORT

In May 2025, crude oil prices in India showed a modest recovery, trading between $58.92 and $63.67 per barrel and ending the month at $60.79 per barrel. The Indian crude basket averaged $63.84, a slight rebound from April’s steep drop, when prices had fallen from above $71 to under $59. Though the 3% monthly gain reflected some stabilization, prices remained significantly below early-2025 highs. The global market continued to struggle with oversupply and weak demand, which kept price momentum subdued. A major contributor to this environment was OPEC+’s decision to increase output by 411,000 barrels per day in May, adding to global inventories. The Indian Petroleum Ministry emphasized that global supply remained ample, making a return to $80 levels unlikely in the near term. Demand concerns, stemming from US-China trade tensions and fears of a global slowdown, further capped gains. Moreover, OPEC+ signalled plans for another production hike in June, reinforcing expectations of a supply-heavy market. This soft pricing landscape had a mixed impact on India. For oil marketing companies (OMCs), lower crude costs improved marketing margins for petrol and diesel, partially offsetting recent excise duty hikes. Expectations of a decline in domestic natural gas prices also rose, with potential relief for CNG and PNG consumers. Yet, Indian retail fuel prices stayed relatively unchanged, highlighting the disconnect between international crude trends and domestic pump prices. This divergence stems largely from India’s layered pricing system. Heavy central and state taxes—excise duties and VAT—form a large portion of the final retail price, often muting the effect of falling global prices. OMCs, though technically free to revise prices daily, frequently delay changes due to political pressures or inflation concerns, especially during sensitive periods like elections. Currency fluctuations also influence domestic pricing. A weaker rupee increases import costs, countering benefits from cheaper crude, while a stronger rupee can soften the impact of rising prices. Additionally, OMCs often use low-price periods to recover past losses from previous price freezes, prioritizing financial stability over immediate consumer relief. Though India formally deregulated fuel prices, government influence still persists in the form of implicit guidance or strategic intervention. Overall, while global crude prices in May 2025 modestly rebounded and supported refiners’ margins, Indian consumers saw limited benefit due to high taxes, currency volatility, OMC pricing strategies, and legacy policy structures that continue to shape the domestic fuel market.



Top | Back
The information contained herein (the “Information”) may not be reproduced or disseminated in whole or in part without prior written permission from the Company. The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared based on publicly available information, internally developed data and other sources believed to be reliable. The directors, employees, affiliates or representatives (“Entities & their affiliates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy, reliability and is not responsible for any errors or omissions or for the results obtained from the use of such information. Readers are advised to rely on their own analysis, interpretations & investigations. Certain statements made in this presentation may not be based on historical information or facts and may be forward looking statements including those relating to general business plans and strategy, future financial condition and growth prospects, and future developments in industries and competitive and regulatory environments. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, they do involve several assumptions, risks, and uncertainties. Readers are also advised to seek independent professional advice to arrive at an informed investment decision. Entities & their affiliates including persons involved in the preparation or issuance of this document shall not be liable in any way for direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of the lost profits arising from the information contained in this material. Readers alone shall be fully responsible for any decision taken based on this document.
Copyright © 2024 Fintso