Global Oil Prices Plummet Following US-Iran Ceasefire, Yet Nepali Consumers Face Continued High Costs

Kathmandu. Following a two-week ceasefire agreement between Iran and the United States, international crude oil prices saw a sharp decline on Wednesday. However, it appears that the relief felt in the global market will take time to reach Nepali households and vehicle owners.

With US President Donald Trump announcing the ceasefire and the reopening of the Strait of Hormuz—which had been effectively closed following attacks on Iran—US crude oil prices fell by 15 percent to $96.31 per barrel, while Brent crude dropped 13 percent to $95.36.

Despite the global drop, the Nepal Oil Corporation (NOC) has signaled that domestic prices are unlikely to decrease. NOC spokesperson Manoj Thakur cited technical and financial reasons, noting a significant disparity between crude oil prices and the refined fuel purchased by the corporation.

'It is important to understand that we do not have a direct link to crude oil,' said spokesperson Thakur. 'Even with crude oil around $100, the price of refined fuel like diesel in the international market has reached $300. Under normal circumstances, this gap would be only $20–$25, but currently, it is between $200 and $250. Therefore, our purchase rate does not drop immediately just because crude oil prices fall.'

Furthermore, Thakur stated that despite the government's decision to provide a 50 percent tax exemption on petroleum products, the corporation remains in significant debt. According to him, the loss is 34 rupees per liter for petrol and 120 rupees per liter for diesel.

He argued that while the government's tax relief provides a benefit of 17.5 rupees on petrol and 11 rupees on diesel, it cannot fully address the corporation's massive losses. 'The government's exemption recovers only about 1.5 billion rupees every 15 days, whereas our loss for the same period is 11.71 billion rupees,' Thakur added.

The corporation is awaiting the new price list from the Indian Oil Corporation. The new prices, expected on the evening of the 15th, will determine the future direction of fuel prices in Nepal.

Due to the corporation's accumulated debt and the high cost of refined oil, it is highly unlikely that consumers will see immediate benefits from the current global market decline.