Prakash Kafle / Kathmandu. Following U.S. President Donald Trump’s announcement of a two-week ceasefire with Iran, international crude oil prices have seen a significant decline. However, this relief in the global market is unlikely to immediately benefit Nepali consumers. With expectations that the previously disrupted Strait of Hormuz will resume normal operations, U.S. crude oil prices have dropped by around 15 percent to $96.31 per barrel. Similarly, Brent crude has fallen by 13 percent to $95.36 per barrel.
Despite the drop in international crude oil prices, the Nepal Oil Corporation has indicated that there will be no immediate impact in Nepal. According to the corporation’s spokesperson Manoj Thakur, the large price gap between crude oil and refined petroleum products purchased by Nepal makes it difficult to reduce prices right away. He stated that even when crude oil prices are around $100 per barrel, the price of refined fuels such as diesel in the international market can reach up to $300. Under normal conditions, this gap is only about $20–25, but it has now increased to around $200–250, meaning cheaper crude oil does not directly translate into lower purchase prices. Furthermore, despite the government providing a 50 percent tax exemption on petroleum products, the corporation continues to face significant losses. Currently, the loss is estimated at around NPR 34 per liter for petrol and NPR 120 per liter for diesel.
Although the tax exemption has provided relief of about NPR 17.5 per liter for petrol and NPR 11 per liter for diesel, it is still insufficient to offset the corporation’s overall losses. According to Thakur, the tax relief saves about NPR 1.5 billion over 15 days, while during the same period, the corporation’s losses reach approximately NPR 11.71 billion.
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