Petrol, diesel prices hiked by Rs 3 per litre amid West Asia crisis

Petrol and diesel prices were hiked by around Rs 3 per litre across India on Friday, May 15, marking the first increase in retail fuel rates in nearly four years. The hike comes as state-run oil companies began passing on part of the burden of soaring global crude oil prices triggered by the ongoing West Asia conflict.

With the revision taking immediate effect, petrol in Delhi now costs Rs 97.77 per litre, up from Rs 94.77, while diesel prices rose to Rs 90.67 per litre. Fuel prices also climbed sharply across other metros, with petrol now retailing at Rs 106.68 in Mumbai, Rs 108.74 in Kolkata and Rs 103.67 in Chennai. Diesel prices rose to Rs 93.14 in Mumbai, Rs 95.13 in Kolkata and Rs 95.25 in Chennai. Bengaluru recorded petrol prices at Rs 106.17 per litre and diesel at Rs 94.10.

The hike comes amid mounting pressure on oil marketing companies as global crude oil prices surged following disruptions linked to the conflict in West Asia and concerns over shipping through the Strait of Hormuz. India’s crude basket, which averaged around USD 69 per barrel before the conflict, has since climbed to over USD 113 per barrel, with Brent crude briefly touching USD 126 earlier this year.

Officials said the latest increase reflects only a fraction of the actual rise required to fully offset the increase in global energy costs. State-owned Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited had kept retail fuel prices unchanged since April 2022, apart from a one-time Rs 2 per litre cut announced ahead of the 2024 Lok Sabha elections.

According to Petroleum Minister Hardeep Singh Puri, the three oil companies are currently losing nearly Rs 1,000 crore every day because of the widening gap between international crude prices and domestic retail rates. He warned earlier this week that if elevated crude prices persist, the combined losses of state-run fuel retailers could wipe out their annual profits and touch nearly Rs 1 lakh crore in a single quarter.

Government officials have maintained that India currently has sufficient fuel reserves and there is no plan for fuel rationing despite the ongoing global energy disruption. Oil Secretary Neeraj Mittal recently said the country holds around 60 days of fuel stocks and nearly 45 days of LPG inventories.

Alongside petrol and diesel, compressed natural gas (CNG) prices have also risen. In Delhi-NCR, CNG now costs Rs 79.09 per kilogram after a Rs 2 increase. Similar hikes were earlier announced in Mumbai.

The Union government has increasingly pushed austerity measures as pressure on India’s foreign exchange reserves grows due to rising oil import costs. Earlier this week, Prime Minister Narendra Modi urged citizens to reduce fuel consumption, use public transport, revive work-from-home practices, avoid unnecessary foreign travel and defer gold purchases in order to help conserve foreign exchange.

India imports nearly 90% of its crude oil requirements, making the economy highly vulnerable to fluctuations in international energy prices. Industry experts said the fuel price hike is likely to increase transportation costs and add to inflationary pressures in the coming months.