Petrol, diesel prices up by over Rs 7 in under 2 weeks; yet among lowest globally, say industry sources

India’s public sector oil marketing companies (OMCs)—Indian Oil, Bharat Petroleum, and Hindustan Petroleum—have increased petrol and diesel prices by over Rs 7 per litre in less than two weeks. The latest adjustment on Monday raised petrol to Rs 102.12 per litre and diesel to Rs 95.20 per litre in Delhi, following four staggered hikes since May 15. Since then, petrol has climbed Rs 7.35 per litre, while diesel is up Rs 7.53 per litre, reflecting a 7.7% and 8.6% rise, respectively. The price hikes follow a prolonged freeze on retail fuel adjustments, despite global crude oil prices surging over 50% due to the West Asia conflict and the closure of the Strait of Hormuz. Industry sources state that the incremental increases will ease financial pressure on OMCs, which were previously incurring daily under-recoveries of Rs 1,000 crore. However, prices remain below market rates, and further calibrated adjustments may occur. India’s fuel prices are still among the lowest globally, with petrol averaging Rs 179 per litre in the European Union and diesel Rs 184, while neighboring countries like Pakistan, Myanmar, Nepal, and Sri Lanka sell petrol above Rs 135 per litre. A government source noted that India’s Rs 7 per litre increase is the smallest among major economies outside subsidized Gulf producers, with other nations fully passing on crude cost hikes to consumers. The timing of the hikes was politically sensitive, coinciding with state assembly elections, but the government opted for a staggered approach to mitigate consumer impact. Prior to these adjustments, fuel prices had remained unchanged for four years, including a reduction before the 2024 Lok Sabha polls. Analysts suggest the current increases reflect a balancing act between managing OMC losses and maintaining affordability for domestic consumers.