Petrol, Diesel Prices Hiked for Third Time This Month Amid Middle East Crisis

Petrol and diesel prices in India were increased again on Saturday, marking the third hike this month, as state-run oil marketing companies (OMCs) continue to battle mounting losses triggered by rising global crude oil prices amid the Iran conflict and broader tensions in West Asia.

In New Delhi, petrol prices were raised by Rs 0.87 per litre to Rs 99.51, while diesel prices increased by Rs 0.91 per litre to Rs 92.49. The latest revision follows two earlier hikes this month, including a sharp Rs 3 per litre increase on May 15 and another increase of nearly Rs 0.90 per litre on May 19.

Since May 15, petrol prices in Delhi have risen by Rs 4.74 per litre, while diesel prices have increased by Rs 4.82 per litre.

Fuel prices continued to differ across metro cities because of variations in local Taxes and levies.

The latest increase in domestic fuel prices has been driven by the sharp rally in international crude oil prices following escalating geopolitical tensions in West Asia and fears of supply disruptions around the Strait of Hormuz.

India’s crude oil basket, which averaged nearly USD 69 per barrel in February, has climbed to around USD 113-114 per barrel in recent months. Benchmark Brent crude settled at USD 103.54 per barrel on Friday compared with USD 72.87 on February 27, reflecting an increase of more than 42 per cent since the conflict began on February 28.

Although Brent crude has declined around 5.5 per cent from levels seen during the first fuel price hike on May 15, oil prices remain above the USD 100 per barrel mark and continue to stay volatile. Industry experts said retail fuel prices in India may continue to rise unless crude oil prices stabilise below USD 100 per barrel, while a more sustainable level would be around USD 70 per barrel.

The three public sector fuel retailers — Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited — together account for more than 90 per cent of India’s fuel retail market and revise prices simultaneously.

According to industry executives and sector analysts, the gradual increase in fuel prices is aimed at reducing under-recoveries suffered by OMCs.

Despite the three rounds of hikes, sector experts estimate that oil companies are still losing around Rs 8-10 per litre on petrol and diesel sales, apart from losses incurred on domestic LPG cylinders.

Retail fuel prices in India had largely remained unchanged since April 2022, except for a one-time reduction of Rs 2 per litre announced in March 2024. The government had suspended daily fuel price revisions in 2022 to shield consumers from extreme volatility in global crude markets after Russia’s invasion of Ukraine.

India imports nearly 88-90 per cent of its crude oil requirements, making domestic fuel prices highly sensitive to global oil price movements and fluctuations in the rupee-dollar exchange rate. The ongoing geopolitical crisis in West Asia has increased pressure on India’s energy import bill, while concerns over supply disruptions and higher freight and insurance costs have further burdened refiners and fuel marketers.

The latest fuel price hikes mirror the trend seen in 2022, when petrol and diesel prices were raised by nearly Rs 9 per litre between late March and early April following the Russia-Ukraine conflict.

Despite the recent spike in crude oil prices, the three state-run OMCs reported strong earnings for FY26, supported by stable crude prices during most of the financial year.

Indian Oil Corporation and Hindustan Petroleum Corporation Limited reported strong quarterly profit growth, while Bharat Petroleum Corporation Limited posted largely flat net profit. The earnings were supported by higher refining and marketing margins during periods when crude oil prices remained stable before the U.S.-Israel attack on Iran disrupted global energy markets.

Disclaimer: The article is for informational purposes only and not investment advice.