No petrol, diesel price hike proposal yet; govt may support OMCs if crude stays high

The government currently has no proposal to increase petrol and diesel prices despite a sharp rise in crude oil prices, sources said, as authorities focus on ensuring energy security and maintaining stable fuel supplies.

The Indian crude basket has risen to $115.27 per barrel as of September 22, while the average for September so far stands at around $114.83 per barrel.

Sources said crude prices are expected to remain volatile in the run-up to the US midterm elections in November, adding to uncertainty for India’s oil import bill and domestic fuel pricing.

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Meanwhile, diplomatic channels are working round the clock to facilitate the movement of crude and fuel ships through the Strait of Hormuz, a critical route for global oil supplies.

The government is also prioritising energy security and stable crude procurement from Russia, while simultaneously looking at ways to diversify India’s crude sourcing. Iraq and Saudi Arabia are among the suppliers that could gain importance as India looks to broaden its crude basket.

The elevated crude prices are also putting pressure on state-owned oil marketing companies (OMCs), which have kept retail petrol and diesel prices unchanged. Current estimates suggest OMCs are facing under-recoveries of around ₹5 per litre on petrol and ₹23 per litre on diesel.

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If elevated crude prices persist and retail fuel prices remain unchanged, the government may have to consider providing financial support to OMCs at a later stage, sources said.

The government is therefore balancing three priorities – keeping domestic fuel prices stable, protecting the finances of OMCs and ensuring uninterrupted energy supplies amid heightened geopolitical and supply-chain risks.