New Delhi, Sep 12 (PTI) Price of international crude oil - the raw material for making petrol and diesel - dropped to a three-year low before marginally recovering but a revision in domestic petrol and diesel rates is likely only if lower rates are sustained, industry sources and officials said.

Global oil benchmark Brent crude futures fell below USD 70 per barrel on Tuesday - the first time since December 2021 - but gained thereafter after Hurricane Francine hit crude supply in the Gulf of Mexico. Brent rose above USD 71 a barrel on Thursday while West Texas Intermediate advanced to trade near USD 68.

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Petrol and diesel prices - which have been on a freeze for over two years now barring a pre-election reduction earlier this year - will be revised if the declining trend sustains, they said.

Oil Secretary Pankaj Jain speaking to reporters on the sidelines of an event here, said the oil companies will be taking appropriate decisions on reducing fuel prices if international oil prices were to settle lower on a sustained basis.

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Industry sources said the three state-owned fuel retailers are making good profits on petrol and diesel but want the trend to continue before deciding on a revision.

"They dont want a situation where they cut prices and are faced with a situation were international prices rise," an official explained.

Brokerage Emkay GLobal Financial Services in a note said it expects Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) to cut petrol and diesel prices before elections in Maharashtra.

"We believe there are expectations of a retail price cut in auto-fuels for oil marketing companies (OMCs) amid the upcoming state elections. While we do not rule out the same, the model code of conduct for J&K and Haryana is on for a month. There could be a cut only toward Diwali and before Maharashtra election's model code of conduct, which could be Rs 2 per litre each for petrol and diesel and possibly coupled with an equivalent increase in excise duty," it said.

However, during the next month, OMCs can earn supernormal marketing margins, covering LPG under-recoveries and inventory losses to a large extent.

"We estimate implied July-September gross marketing margins at Rs 9.7/8 per liter for petrol/diesel vs Rs 4.7/3.8 in Q1 (April-June) and a normative range of Rs 3.5-4 each," it said.

India imports 85 per cent of its oil needs and its fuel pricing is indexed to international rates.

While the OMCs have pricing freedom, they have since late 2021 not revised prices in line with cost. They frooze rates in April 2022 only to cut prices by Rs 2 per litre each just before general elections before again freezing the rates. Petrol costs Rs 94.72 per litre in the national capital and diesel comes for Rs 87.62 a litre.

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