New Delhi, 01 July (H.S.): State-run Oil Marketing Companies (OMCs) have reduced the price of Aviation Turbine Fuel (ATF), commonly known as jet fuel, by Rs 5 per litre with effect from Tuesday. Following the revision, the price of ATF in the national capital has fallen from Rs 115 per litre to Rs 110 per litre. On a bulk basis, the price has been reduced from Rs 1.15 lakh per kilolitre to Rs 1.10 lakh per kilolitre.

The reduction is expected to provide relief to domestic airlines by lowering one of their largest operating expenses.

The price cut follows a decline in international crude oil prices. After the outbreak of conflict in West Asia, ATF prices had climbed to a record high of Rs 1.15 lakh per kilolitre. This is the first reduction since prices reached that peak.

ATF prices are generally revised on the first day of every month based on the average international crude oil prices and the prevailing rupee-dollar exchange rate. However, in the event of emergencies or extraordinary market conditions, prices may also be revised outside the regular schedule.

Industry experts noted that aviation turbine fuel accounts for the largest share of an airline's operating costs. As a result, the latest reduction is expected to ease cost pressures on airlines and could eventually translate into lower airfares for passengers.

Tarkeshwar Nath Vaishnav, Chief Executive Officer of TNV Financial Services, said easing geopolitical tensions in West Asia and the partial resumption of crude oil shipments through the Strait of Hormuz have reduced uncertainty in global energy markets.

According to Vaishnav, crude oil prices have declined by nearly 40 per cent from recent highs and are currently trading between USD 70 and USD 73 per barrel in the international market.

He said there is a possibility that crude oil prices could decline by another USD 10 per barrel in the coming days. If that happens, prices of other petroleum products, including petrol and diesel, may also be reduced.

Vaishnav added that Nayara Energy has already initiated price cuts for petrol and diesel. Market participants are now closely watching whether public sector oil marketing companies such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) will also reduce retail fuel prices in the coming days.

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Hindusthan Samachar / Jun Sarkar