Petrol and diesel prices may be reduced after October 5, for the first time since March 2024, according to brokerage firm CLSA.

The remarks came after the comments from India’s Oil Secretary, Pankaj Jain, suggesting a price drop last month and media reports indicating that Maharashtra’s state elections are expected in early November.

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CLSA noted that Maharashtra is a crucial battleground, and the BJP-led alliance may consider lowering fuel prices as a populist move.

Notably, the fuel prices have not changed since March 2024.

According to media reports, Jain said that the state-run oil marketing companies (OMCs) may consider reducing petrol and diesel prices if international crude prices stay low for an extended period.

CLSA also believes that the government may also raise excise duty on petrol and diesel, along with any retail fuel price cut. Excise duty is a type of indirect tax levied on the manufacture or production of goods within a country.

In the context of petrol and diesel, excise duty is a tax imposed by the central government on the production or sale of these fuels within India.

As per the brokerage, Brent crude prices have cooled off below USD 75 per barrel, despite OPEC’s proactive steps to keep prices hike. The CLSA noted that the government may opportunistically raise excise duty.

The report said the sharp decline in crude oil prices is positive for Indian oil marketing companies like Indian Oil, Bharat Petroleum Corporation and Hindustan Petroleum Corporation.

However, a potential rate cut and excise duty hike make these oil marketing companies vulnerable.

The Central government levies an excise duty of Rs 19.8 and Rs 15.8 per litre on petrol and diesel, respectively.

These duties stand 40 per cent and 50 per cent lower compared to their peak levels in 2021. This duty was last cut when oil prices were above USD 100 per barrel.