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The government appears reluctant to reduce prices of petroleum products in the domestic market of Nepal despite fuel prices hitting three-month low in the international market.

Global oil prices have fallen dramatically following the opening of the Strait of Hormuz, according to media reports.

International media reported that despite clashes between the US and Iran, shipping routes are expected to gradually resume, pushing Brent crude down to $72 per barrel—a level last seen before the war in late February. This is a price similar to that recorded on the eve of the war in late February.

However, Nepal Oil Corporation (NOC) has remained firm to keep the fuel prices intact at the level when the price in the international market reached a record high of US $119.50 per barrel. Petrol, which was Rs 157 per liter before the Middle East tension, now costs Rs 217 and diesel price stands at Rs 237, up from Rs 167 a liter in mid-March.

Finance Minister Swarnim Wagle, however, insists that petroleum prices, including diesel and petrol, are expected to decline as tensions in the Middle East ease. “But the reduction will not be made immediately,” said Wagle.

Addressing lawmakers on Sunday during the House of Representatives’ discussion on the Finance Bill 2026, Wagle cited procedural delays. “Since Nepal purchases fuels from the Indian Oil Corporation, it takes time to follow due process and realize the actual benefits,” he said.

Wagle also tried to spare the blushes by saying that the government instead has reduced customs duty by 50 percent on diesel, petrol, and kerosene, along with the infrastructure development tax on diesel and petrol, to cushion consumers in the aftermath of the recent price hikes.

Consumers, however, have not benefitted from this move, as Nepal Oil Corporation continues to exercise monopoly over the domestic market and has not lowered retail prices, instead keeping them intact to offset the losses it claims to have incurred during the period of soaring international oil costs.

An NOC official said the state-owned utility has already exhausted Rs 19 billion from the price stabilization fund and Rs 17 billion in accumulated profits, while spending an additional Rs 36 billion this fiscal year to bridge the gap between import costs and domestic selling prices.

Lower oil prices are expected to benefit sectors such as aviation and industry, which rely heavily on petroleum products as raw materials and energy sources. The decline in crude prices is also anticipated to ease retail inflation by reducing fuel, transportation, and manufacturing costs.

By Rajesh Khanal