India fuel price hike lifts Delhi petrol and diesel rates as global crude swings on Iran conflict

Petrol and diesel prices rose again on Monday, marking the fourth increase in under two weeks. Petrol went up by Rs 2.61 a litre and diesel by Rs 2.71 a litre. The revisions extended a delayed pass-through of higher global crude costs linked to the Iran conflict. The cumulative rise since May 15 reached nearly Rs 7.5 per litre.

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In Delhi, petrol climbed to Rs 102.12 per litre from Rs 99.51. Diesel increased to Rs 95.20 from Rs 92.49, industry sources said. Fuel rates were now at the highest level since May 2022. Prices had stayed mostly unchanged for over two years. A Rs 2-per-litre cut was given in March 2024 before national elections.

Petrol prices and diesel prices across major cities

Prices differed by state because of local taxes and levies. After Monday’s hike, petrol in Mumbai stood at Rs 111.21 per litre and diesel at Rs 97.83. Kolkata recorded petrol at Rs 113.51 and diesel at Rs 99.82. In Chennai, petrol cost Rs 107.77 while diesel was priced at Rs 99.55 per litre.

Retail revisions were earlier made in steps through May. Rates first rose by Rs 3 per litre on May 15. A 90-paise increase followed on May 19. Another change came on May 23, when petrol rose by 87 paise. Diesel increased by 91 paise per litre on May 23.

Petrol prices and diesel prices linked to global crude oil moves

The latest increase came even as crude prices dropped sharply on hopes of a deal. Brent crude fell more than 5 per cent after the US and Iran agreed in principle to reopen the Strait of Hormuz. Before that fall, global crude prices had jumped over 50 per cent since late February. The surge followed US-Israeli strikes on Iran and shipping disruption fears.

State-run retailers had held back increases for weeks despite cost pressure. The government said the delay was meant to protect consumers from inflation. Opposition parties claimed the timing was linked to elections. The May 15 rise came after the Bharatiya Janata Party BJP won three of five state and UT elections, including West Bengal.

Petrol prices and diesel prices pressure on oil marketing companies

Despite higher retail prices, petrol, diesel and domestic cooking gas LPG were still sold at heavy losses. State-run firms Indian Oil Corporation IOC, Bharat Petroleum Corporation Ltd BPCL, and Hindustan Petroleum Corporation Ltd HPCL controlled about 90 per cent of the market. The firms also paused hikes in jet fuel ATF prices, even as other fuels rose.

Sujata Sharma, Joint Secretary in the Ministry of Petroleum and Natural Gas, said the losses were close to Rs 600 crore per day, down from Rs 1,000 crore before May 15. Sharma did not explain why LPG losses were included. LPG losses were expected to be offset by government subsidy support under existing practice.

Cooking gas and transport fuels also saw other increases during the conflict period. Since mid-May, domestic LPG prices rose by Rs 60 per 14.2-kg cylinder. Compressed natural gas CNG prices increased by Rs 4 per kg. Alongside public sector firms, private fuel retailers also lifted rates during the same period.

Nayara Energy had raised petrol and diesel by Rs 5 and Rs 3 per litre in March. Shell plc increased petrol by Rs 7.41 from April 1. Shell plc also raised diesel by as much as Rs 25 per litre from April 1. Jio-bp, a joint venture of Reliance Industries Ltd and BP Plc, aligned pump prices with state-run retailers.

Petrol prices and diesel prices trigger political responses

In Mumbai, Finance Minister Nirmala Sitharaman defended the hike as a market-driven revision by oil marketing companies. Sitharaman said crude prices had climbed sharply due to the West Asia conflict. Sitharaman added that the government had forgone over Rs 1 lakh crore a year in taxes. That support came through excise duty cuts of Rs 10 a litre on petrol and diesel.

Congress leader Rahul Gandhi criticised Prime Minister Narendra Modi after the price rise. "Petrol and diesel prices are being increased in instalments so that peoples pockets are quietly picked,\" Gandhi said in a social media post. Gandhi also called Modi Mahangai Manav Modi. Congress president Kharge alleged fuel price rises over 12 years added up to Rs 43 lakh crore of public loss.

Kharge said petrol rose from Rs 71.41 per litre in 2014 to Rs 102.12 per litre in 2026. Kharge also cited diesel moving from Rs 56.71 per litre to Rs 95.20 per litre in 2026. The back-to-back hikes were expected to add pressure on transport and logistics costs. They were also seen as likely to feed broader price rises across the economy.

Petrol prices and diesel prices add to inflation and demand controls

India’s retail inflation rose to 3.48 per cent in April from 3.40 per cent in March. Wholesale inflation increased to 8.3 per cent, a 42-month high. Higher fuel and energy costs drove much of that change. The government also aimed to reduce India’s oil import bill. It also sought to lower fuel use amid pressure on foreign exchange reserves and the current account deficit.

Prime Minister Modi urged citizens and government departments to conserve fuel last week. Modi asked for remote working and fewer non-essential trips. Several state governments told departments to cut travel and reduce office attendance. Industry officials said the retail revisions looked measured. Officials said the changes could ease pressure on oil firms without a sudden inflation jump.

Prashant Vasisht, Senior Vice President and Co-Group Head, Corporate Ratings, ICRA Ltd, said, \"Despite the latest hike in retail prices of auto fuels, oil marketing companies under-recoveries remain stubbornly high due to increasing losses in domestic LPG sales and a high premium to the crude marker. ICRA estimated that the crude price at USD 120-125 per barrel, and considering the past 10-year average crack spreads of auto fuels, oil marketing companies are incurring a loss of about Rs 700-800 crore daily on the sale of auto fuels and domestic LPG, even after factoring in the fuel price hike. This high level of under-recoveries is unsustainable.\"

The combined details showed how global crude swings, delayed price pass-through, and ongoing under-recoveries shaped the recent increases. The four hikes since May 15 lifted pump prices in several cities. At the same time, ATF rates were held, while LPG and CNG became costlier. Officials and opposition leaders continued to contest the timing and impact.

With inputs from PTI