Crude Oil Falls Below $80: When Will Petrol and Diesel Prices Drop In India?

Global Crude Oil Prices Drop After Peace Deal But But Fuel May Stay Expensive In India

A peace deal between the US and Iran in mid-June 2026 has caused global crude oil prices to fall. Brent crude oil now costs less than $80 per barrel, which is the lowest price in months. Before this, prices had stayed above $100 per barrel because of the conflict. While oil is cheaper now, the price of petrol and diesel at Indian pumps might not drop immediately.

In May 2026, petrol prices in Delhi went above Rs 100 and reached Rs 102.12 per litre. Diesel also rose to Rs 95.20. These increases happened because oil companies like HPCL, BPCL, and Indian Oil raised prices by over Rs 7 per litre in late May. Even the price of a domestic LPG cylinder went up by Rs 29 on June 7.

When global oil prices first spiked above $100, these companies absorbed the extra costs instead of making customers pay more. This created "under-recoveries," which means the companies were losing money. At the peak of the conflict, they were losing about Rs 30,000 crore every month. Eventually, the companies had to raise prices because they could not afford to lose more money.

Even though crude oil is cheaper now, there are two main reasons why you might not see lower prices at the pump right away:

1. Inventory Cycles: Oil companies buy oil weeks or months in advance. The fuel you buy today was made from oil bought at higher prices in the past. It usually takes three to six months for the cheaper oil prices to flow through the system.

2. Supply Delays: The conflict disrupted oil production in countries like the UAE, Kuwait, Oman, and Saudi Arabia. It takes time for these countries to start producing oil normally again. This means the actual price India pays for imports might not drop as fast as the global market price.

Oil companies want to recover the money they lost during the conflict before they lower prices for customers. They need to fix their balance sheets and ensure they are financially stable again.

As of June 15, the companies are still losing Rs 3 per litre on petrol and Rs 27 per litre on diesel. While these losses are smaller than before, they are still losing money on every litre they sell. Experts believe that prices might only drop in the second half of 2026. This will only happen if oil stays below $80 per barrel and the value of the Indian rupee remains steady.