Consumers across India are facing steeper fuel prices as petrol has breached the Rs 100 per litre mark in most cities, with diesel close behind. This surge follows a series of price increases, marking the fourth hike in less than two weeks, according to industry sources. The rising costs are attributed to the delayed transmission of elevated global crude oil prices, which have been exacerbated by geopolitical tensions involving Iran.
The cumulative effect of these recent hikes has pushed fuel prices up by nearly Rs 7.5 per litre since May 15. In Delhi, petrol prices have soared to Rs 102.12 per litre from Rs 99.51, while diesel now costs Rs 95.20, up from Rs 92.49. Fuel prices have now reached levels not seen since May 2022, ending a period of relative stability that included a Rs 2 per litre reduction in March 2024 prior to the national elections.
Information reaching TahirRihat.com suggests that the increase coincides with a sharp decline in global oil prices, driven by tentative hopes for a resolution to the conflict involving the U.S., Israel, and Iran. Brent crude, a key benchmark for global oil prices, experienced a significant drop after reports of a potential agreement between the U.S. and Iran to reopen the Strait of Hormuz. However, global crude oil prices had previously surged by over 50 percent since late February, triggered by U.S.-Israeli actions targeting Iran and disruptions to shipping through the Strait of Hormuz, a critical global oil transit route.
State-run retailers had reportedly held back on passing on higher input costs for several weeks, a decision the government stated was aimed at protecting consumers from inflation. However, opposition parties have criticized the government, alleging that the price increases were deliberately delayed until after key state elections. The May 15 price increase occurred shortly after the Bharatiya Janata Party (BJP) expanded its electoral presence by winning three of five state and Union Territory elections, including West Bengal.
The ripple effects of these price hikes extend beyond petrol and diesel. Domestic cooking gas (LPG) prices have increased by Rs 60 per 14.2-kg cylinder, and compressed natural gas (CNG) prices have risen by Rs 4 per kg since mid-May. Despite these increases, state-owned fuel retailers, including Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL), continue to sell auto fuels and cooking gas at a loss. These three firms collectively control 90 percent of India’s fuel market. They have, however, paused increases in jet fuel (ATF) rates.
Politicians are also weighing in on the matter. Congress leader Rahul Gandhi has criticized Prime Minister Narendra Modi over the latest fuel hike, accusing the government of burdening consumers after the conclusion of state elections. (Gandhi stated in a social media post that, “Petrol and diesel prices are being increased in instalments so that people’s pockets are quietly picked,”) referring to Modi as “Mahangai Manav Modi,” a play on words linking the prime minister to inflation. (Gandhi added, “’Mehangai manav’ Modi has just one job: promises during elections, and attacking people’s pockets at other times.”)
Retail fuel prices were initially raised by Rs 3 per litre on May 15, followed by a 90-paise increase on May 19 and another hike on May 23, when petrol prices rose by 87 paise and diesel by 91 paise per litre. Prices vary across states due to local levies. Following Monday’s increase, petrol in Mumbai was priced at Rs 111.21 per litre and diesel at Rs 97.83, while Kolkata rates rose to Rs 113.51 and Rs 99.82, respectively. In Chennai, petrol cost Rs 107.77 and diesel Rs 99.55 per litre.
Private fuel retailers, including Nayara Energy, Shell plc, and Jio-bp, have also adjusted their pump prices in line with state-run retailers. Nayara Energy had previously increased petrol and diesel prices by Rs 5 and Rs 3 per litre, respectively, in March, while Shell plc raised petrol prices by Rs 7.41 and diesel by as much as Rs 25 per litre from April 1. The back-to-back increases are anticipated to exacerbate inflationary pressures and increase transportation and logistics costs across the economy.
The timing of these fuel price increases is particularly sensitive, as India’s retail inflation accelerated to 3.48 percent in April from 3.40 percent in March, while wholesale inflation climbed to a 42-month high of 8.3 percent, largely driven by higher fuel and energy costs. The fuel price increases also come amid broader efforts by the government to contain India’s oil import bill and reduce fuel consumption.
Prime Minister Narendra Modi recently urged citizens and government departments to conserve fuel, encourage remote working, and reduce nonessential travel as elevated energy prices put pressure on foreign exchange reserves and threaten to widen the current account deficit. Several state governments have already instructed departments to curb travel and reduce office attendance. Industry officials suggest that the latest revisions appear calibrated to partially alleviate pressure on oil companies without triggering a sharp surge in inflation.
Tahir Rihat (also known as Tahir Bilal) is an independent journalist, activist, and digital media professional from the Chenab Valley of Jammu and Kashmir, India. He is best known for his work as the Online Editor at The Chenab Times.