Petrol, diesel prices likely to be hiked within a week: Sources

The ongoing conflict in West Asia and disruptions around the Strait of Hormuz have pushed global crude oil prices sharply higher, putting pressure on governments and oil companies across the world. But despite crude rising from nearly $70 per barrel to around $126 per barrel, petrol and diesel prices in India have remained largely unchanged.

That relief, however, may not last much longer.

Sources told Business Today that petrol and diesel prices could be hiked before May 15 as public sector oil marketing companies (OMCs) continue to suffer heavy under-recoveries estimated at nearly ₹30,000 crore per month.

The Strait of Hormuz — through which almost 20% of the world’s oil supply passes — has remained heavily disrupted for weeks due to the ongoing war in West Asia, triggering a global energy shock.

Fuel prices across many countries have surged sharply. Petrol is currently priced at nearly ₹295 per litre in Hong Kong, around ₹240 in Singapore, ₹225 in the Netherlands, ₹210 in Italy, and about ₹195 in the UK.

India, meanwhile, continues to see petrol prices around ₹95 per litre in several cities without any major revision.

Several countries have already introduced emergency measures to manage the crisis. Bangladesh imposed fuel rationing, Sri Lanka introduced a four-day work week, Pakistan reduced working days for government offices, while South Korea implemented fuel price caps for the first time in decades.

India, however, avoided fuel shortages, long queues, or rationing.

According to government and industry sources, India moved quickly after the crisis began. Domestic LPG production was ramped up from 36,000 tonnes per day to 54,000 tonnes per day within days. The government also sharply reduced excise duty on petrol and diesel to cushion consumers from rising global prices.

At peak crude prices, the government and OMCs together were effectively absorbing nearly ₹24 per litre on petrol and ₹30 per litre on diesel, according to industry estimates.

Even after the excise duty cuts, Indian Oil, Bharat Petroleum and Hindustan Petroleum together are estimated to have borne losses of nearly ₹30,000 crore per month.

India also managed to stabilise supplies by increasing crude imports from Russia, the US, West Africa and other regions. Refineries have reportedly been operating at over 100% capacity to maintain uninterrupted fuel availability.

Officials say the country’s energy infrastructure expansion over the past decade also helped India manage the crisis better. LPG terminals have doubled since 2014, crude sourcing has expanded from 27 countries to 40 countries, ethanol blending has risen from 1.5% to 20%, and strategic petroleum reserves have been strengthened.

However, with the West Asia conflict continuing and crude prices remaining elevated, pressure on public sector oil companies is intensifying.