NEW DELHI – Good news from the world oil markets: Crude oil prices have dipped to their lowest in five years, hovering around $62 a barrel for Brent and $58 for WTI as of today. That’s a big drop from the $80-plus levels we saw earlier this year. Families across India, from busy Mumbai streets to quiet Kerala villages, are waiting for this to mean cheaper petrol and diesel at the pump. But here’s the catch – fuel prices here haven’t budged in 11 months. Petrol still costs ₹94-107 per litre, diesel ₹87-96, depending on your city. Why the wait? And when can we expect a cut?
This story hits home for every Indian driver. With Diwali just past and wedding season ahead, high fuel bills eat into our budgets. A two-wheeler rider in Delhi might spend ₹500 a week on petrol, while a truck driver in Punjab pays thousands for diesel to haul goods. Lower global prices should help, but taxes and old policies are holding things back. Experts say relief could come by early 2026 if oil stays low and the government acts. “Prices at ₹100 a litre are a daily burden for the middle class,” says Ravi Kumar, a cab driver from Bengaluru who shared his frustration on a recent call. “We need cuts now, not promises.”
In this report, we’ll break it down simply: What’s driving the global drop, how India’s fuel system works, why no change yet, and what might happen next. We’ve checked facts with top sources like the IEA, EIA, and Indian government data to keep it straight. Let’s get into it.
Global Oil Slump: What’s Behind the 5-Year Low?
Crude oil, the black gold that powers our cars and trucks, has been on a slide. Brent crude – the benchmark for much of the world – closed at $62.47 a barrel on November 21, down 1.44% in a day and 16.9% from last year. WTI, the US grade, hit $58.06, a 1.59% drop. That’s the cheapest since late 2020, when COVID locked down the world and demand crashed.
Why now? First, supply is flooding the market. The US, now the top producer, pumped out record levels – over 13 million barrels a day in October. Non-OPEC countries like Brazil, Guyana, and Canada added 1.7 million barrels a day this year. Even OPEC+, the big cartel including Saudi Arabia and Russia, started easing cuts, adding 1.4 million barrels by year’s end.
Demand? It’s growing, but slower than hoped. Global oil use rose just 700,000 barrels a day this year, down from earlier forecasts due to trade fights and a weak economy. China, the biggest buyer, saw flat growth in Q3 from EVs and renewables. Geopolitics added twists – US sanctions on Russian firms like Rosneft cut exports, but Russia rerouted oil to India and China, keeping supply steady. Talks of a Ukraine peace deal could flood markets more.
The result? Inventories are piling up – a 1.9 million barrel surplus since January. EIA predicts Brent at $55 a barrel in 2026, the lowest since 2021. IEA’s Timur Guel says, “Supply outpaces demand, and that’s pushing prices down hard.” For India, which imports 85% of its oil, this should mean savings. But it hasn’t yet.
How Fuel Prices Are Set in India: A Simple Breakdown
Ever wonder why ₹100 gets you just 1 litre of petrol? It’s not all crude oil. India switched to daily pricing in 2017, so rates change every morning at 6 AM based on global cues. But here’s the math: Crude makes up only 40-50% of the pump price. The rest? Taxes – about 70% in total.
Take Delhi petrol at ₹94.77 a litre (as of November 23):
- Crude oil import cost: Around ₹40-45 (at $62/barrel and ₹84/$ exchange).
- Refining and dealer costs: ₹10-15.
- Central excise duty: ₹13/litre (hiked in April 2025).
- State VAT: 19.4% (about ₹18).
- Other fees: Road cess, freight – ₹10 more.
Diesel? Similar story – ₹87.67 in Delhi, with ₹10 excise. VAT varies: Mumbai’s 25%+ pushes prices to ₹103.50 petrol, ₹90.03 diesel. Kerala hits ₹107 petrol due to high state taxes.
Oil firms like IOCL, BPCL, and HPCL set prices via the Indian Crude Basket (a mix of imports). Rupee strength helps – it’s at ₹84 to the dollar now, down from ₹87 peaks. But taxes stick. Excise was cut in 2022 but hiked back in 2025 to fill budgets. States love VAT – it funds roads and schools. “Taxes keep prices high even when oil is cheap,” notes PPAC director Sanjay Khanna.
No GST on fuel yet – that’s a debate for another day. States fear losing revenue; Centre wants uniformity. For now, global drops don’t pass through fully.
No Cuts in 11 Months: The Real Reasons
Fuel prices froze on December 1, 2024, despite oil swings. Why? Oil firms absorbed ₹20-30/litre under-recovery earlier this year when oil topped $80. Now, with low prices, they’re recovering losses before cutting retail rates. “OMCs won’t slash until inventories adjust,” says ICRA analyst Aditi Narnaware.
Taxes lock it in. Even if crude falls to $55, pump prices might drop just ₹5-10 without tax cuts. States like Andhra (28% VAT on diesel) or Mumbai (39% on petrol) add the most. Rupee wobbles too – a weaker one could offset gains.
Politics plays a role. Ahead of 2024 polls, cuts happened; now, with budgets tight, hikes like April’s ₹2 excise boost revenue without pump hikes. India buys cheap Russian oil (discounted 20%), helping firms, but retail stays steady. “We’re buffering consumers, but can’t forever,” Oil Minister Hardeep Puri said recently.
Compare neighbors: Nepal petrol at ₹80/litre, Bangladesh ₹70 – lower taxes there. India’s high rates fuel inflation, hitting 5% in October.
What a Drop Means for You and the Economy
If prices fall ₹10/litre? A Delhi commuter saves ₹300 monthly on a scooter. Truckers cut logistics costs 5-7%, lowering veggie prices by 2-3%. Airlines like IndiGo save billions, passing some to tickets. GDP gets a 0.2-0.3% boost from more spending.
But delays hurt. High fuel adds ₹1 lakh crore to import bills yearly, widening deficits. Farmers pay more for diesel pumps; exports get pricier. “Every rupee saved at the pump is money in pockets,” says CII’s Chandrajit Banerjee.
Green shift helps long-term – EVs cut oil need by 10% by 2030. But for now, hybrids and CNG shine.
When Will Prices Drop? Expert Views and Predictions
Relief might come soon. If oil holds $60-65 through December, OMCs could cut ₹5-7/litre by January 2026. Budget 2026 (February) eyes excise cuts if revenue allows. Puri hinted: “If crude stays $72 or below, reductions possible by end-2025.”
EIA sees $55 average next year; Goldman Sachs $76 Q4, but risks lower. States like UP cut VAT in 2024; more could follow. But if tariffs rise under Trump 2.0, demand dips more, delaying cuts.
“Watch oil below $60 sustained – that’s the trigger,” says VLA Ambala of Stock Market Today. For now, fill up smart – apps like MyPetrol track rates.
The Road Ahead: Calls for Change
As 2025 ends, pressure builds. CII wants excise down to fight inflation. EVs get push, but diesel rules trucks. “Fair pricing needs tax reform,” demands FICCI’s Harsha Vardhan. Will Budget deliver? Stay tuned.
Frequently Asked Questions (FAQs)
Q1: Why are global oil prices at a 5-year low in November 2025?
A: Crude prices fell due to too much supply and slow demand growth. US and other non-OPEC countries added 1.7 million barrels a day this year, while OPEC+ eased cuts. Demand grew just 700,000 barrels a day globally, hit by trade tensions and China’s EV boom. Sanctions on Russia cut some exports, but rerouting kept markets full. Brent is $62/barrel, WTI $58 – lowest since 2020. EIA forecasts $55 average in 2026 from inventory builds.
Q2: How are petrol and diesel prices calculated in India?
A: Daily at 6 AM, based on global crude (40-50% of price), refining costs, and taxes (70%). Crude basket + freight + ₹13 excise (petrol)/₹10 (diesel) + state VAT (15-39%) + dealer fee. Delhi petrol: ₹40 crude + ₹18 VAT + taxes = ₹94.77. Rupee/$ rate matters – stronger rupee saves. No GST yet; states set VAT. OMCs like IOCL adjust for losses first.
Q3: Why haven’t Indian fuel prices dropped despite low global oil?
A: OMCs recovered ₹20-30/litre losses from high oil earlier; now buffering. Taxes dominate – excise hiked April 2025 to ₹13/₹10, VAT 20-39% varies by state. Frozen since Dec 2024 for stability amid inflation. India buys discounted Russian oil, but retail waits for inventory adjust. Higher than neighbors due to taxes.
Q4: Current petrol and diesel prices in major Indian cities?
A: As of Nov 23, 2025: Delhi – Petrol ₹94.77, Diesel ₹87.67; Mumbai – ₹103.50, ₹90.03; Bengaluru – ₹102.92, ₹90.99; Chennai – ₹100.80, ₹92.49; Kolkata – ₹105.41, ₹92.02; Hyderabad – ₹107.46, ₹95.70. Unchanged 11 months; varies by VAT (e.g., Mumbai 39%). Check apps for your area.
Q5: When will fuel prices drop in India, and by how much?
A: Possible ₹5-7/litre by Jan 2026 if oil stays $60-65. Budget Feb 2026 may cut excise if revenue ok. Puri: Reductions if crude ≤$72 by end-2025. EIA: $55 oil in 2026 could mean ₹10 drop without tax cuts. Risks: Tariffs slow demand. States like UP may cut VAT first.