India pulls back jet fuel price hike; commercial LPG prices up around ₹200 as oil scales $105

In a volte-face in less than four hours, state-run oil marketing company Indian Oil Corp. Wednesday scaled back its over-100% hike in aviation turbine fuel prices for domestic airlines.

Revised rates on the company website showed that the price of jet fuel for domestic scheduled flights in New Delhi is ₹1,04,927 per kilolitre, only around 8.5% higher than ₹96,638 in March. Earlier in the day, the company website showed the price at ₹207,341.22 per kilolitre for this month. The 100% hike would be effective only on non-scheduled domestic flights, ministry and company officials said.

Alongside, IOCL also raised prices of premium fuels, while private fuel retailer Shell raised the prices of both petrol and diesel at its pumps.

On X, formerly Twitter, the ministry of petroleum and natural gas said the decision to increase ATF prices only partially was taken to insulate airlines from a fuel price shock. “Due to the closure of Strait of Hormuz and extraordinary situation in global energy markets, price of ATF for domestic markets was expected to increase by more than 100% on 1 April,” the tweet read.

“In order to insulate the domestic travel costs from the substantial increase in international prices, PSU Oil Marketing Companies of the Ministry of Petroleum, in consultation with Ministry of Civil Aviation, have passed only a partial and staggered increase of 25% (only Rs.15/litre) to the airlines. Foreign routes will pay for the full increase in ATF prices consistent with what they pay in other parts of the world.”

After the ministry's statement, the rates on the website were revised.

Speaking to reporters on Wednesday, Sujata Sharma, joint secretary, ministry of petroleum and natural gas, said the price with over 100% hike would be effective on non-scheduled domestic flights such as chartered flights.

The price increase comes amid a surge in global crude since the war between the US, Israel and Iran began on 28 February, and the subsequent blockade of the Strait of Hormuz by Iran — a key choke point for about 20% of global oil trade. Brent crude is currently trading at $102.52, lower by 1.39% from its previous close.

The rise in ATF, which accounts for 40% of an airline’s operating costs, could squeeze margins and push up ticket prices just as peak summer travel begins.

Asangba Chuba Ao, joint secretary, ministry of civil aviation said the limited price increase enables airlines to maintain competitive pricing for domestic travellers, avoiding the need for additional fuel surcharges. He added that the government expects the airlines which have increased surcharges in the recent weeks to roll back the hikes to bring relief to passengers.

Ajay Singh, chairman and managing director, SpiceJet said: "The government’s decision to allow only a partial increase in aviation turbine fuel prices comes as a significant relief for the Indian aviation industry at a time of unprecedented global uncertainty."

LPG hike again

Commercial cooking gas prices have also been raised by around ₹200 with effect from Wednesday, marking the second such hike in a month.

In Delhi, a 19-kg LPG cylinder now costs ₹2,078.50, up ₹195.5 since the last revision on 7 March. Commercial LPG is used by restaurants, hotels and industries, and the hike may have inflationary implications. As LPG supplies depend heavily on imports from West Asia, the government has already prioritized supplies to domestic households and curtailed supplies for commercial customers.

On the increase in commercial LPG prices, the petroleum ministry said that the price increase in commercial cylinder price is due to a 44% surge in the Saudi Contract Price, from $542 per metric tonne in March to $780 per metric tonne for April, as 20-30% of global LPG supplies are stuck in Strait of Hormuz.

Further, IOCL has also increased the prices of premium petrol and diesel. The prices of XP100 variant has been hiked from ₹149 per litre to ₹160 per litre in Delhi. The prices 'Xtra Green', premium diesel has been raised from ₹91.49 to ₹92.99 per litre.

Private fuel retailer Shell has also raised petrol prices by ₹7.41 per litre and the price of diesel by ₹25 a litre. Shell is the second private player in the country to raise prices after Nayara Energy amid the ongoing crisis. In Bengaluru, regular petrol is sold at ₹119.85 at Shell pumps, while regular diesel is now sold at ₹123.52 a litre.