Oil Minister Murli Deora has said that petrol and diesel prices would not be cut till crude oil prices fell to $67 a barrel, since the depreciation in the rupee against the US dollar had eroded gains from falling oil prices, which touched a 7-month low.

"At $67 per barrel, there will be no gain and no loss on fuel sales for the oil marketing companies," Deora said. "There cannot be any reduction in fuel prices as of now because the oil companies are still losing a lot of money." India imports over 75 per cent of its crude oil requirement.

The price of the basket of crude oil that Indian refiners buy has dipped almost 36 per cent from the record high in July to $91.69 per barrel on Monday, the latest day for which data are available.  At the same time, the value of the rupee has also fallen over 7 per cent to below Rs 46 per dollar. 

The fall in international crude oil prices and rupee depreciation have opposite effects for state-owned oil marketing companies that are importing crude and refining it in India.

The oil marketing companies � Indian Oil Corporation [Get Quote], Bharat Petroleum Corporation Ltd [Get Quote] and Hindustan Petroleum Corporation Ltd [Get Quote] � buy crude oil for their refineries in dollars. As the value of the rupee falls against the dollar, the refineries pay more in rupees for the crude oil.

But the net effect of these two opposing movements is still favourable to oil companies because their import cost per barrel will now be around 29 per cent lower than when crude oil prices peaked in July this year.

The three companies are, however, still losing around Rs 400 crore every day because they continue to sell petrol, diesel, cooking gas and kerosene below production costs.

At current crude oil prices, the annual under-realisations (the loss from selling petroleum products at below production cost) of these companies on fuel sales are projected at Rs 160,000 crore, said S Sundareshan, additional secretary in the petroleum ministry.

Meanwhile, the Petroleum Ministry has estimated the under-realisations of the oil firms at Rs 47,000 crore for the second quarter of this financial year ending September. In the first quarter ended June 2008, the firms reported under-realisations of Rs 48,000 crore. "The problems for the oil companies still exist," Sundereshan said.

Officials in the Petroleum Ministry, however, said that the Congress party, the largest party in the ruling coalition, was starting to build pressure on the ministry to marginally reduce fuel prices and a cut may be announced if oil prices are at $80-85 per barrel.