Petrol and diesel prices were increased by up to 91 paise per litre on Saturday, the third increase in less than 10 days.
Petrol price has been increased by 87 paise in Delhi from ₹98.64 to ₹99.51 per litre. Diesel rates have gone up by 91 paise from ₹91.58 to ₹92.49.
This is the third increase in rates since May 15, when state-owned oil companies started passing on the elevated energy prices arising from the West Asia conflict in a calibrated manner.
Prices were hiked by ₹3 a litre on May 15, followed by a 90 paise increase on May 19. In all, rates have gone up by almost ₹5 per litre.
Will there be more fuel price hike?
Madan Sabnavis, Chief Economist, Bank of Baroda, said. earlier told Livemint, that “given the losses being incurred by oil marketing companies (OMCs), rise in petrol and diesel prices was inevitable.”
He further indicated that more price hikes could follow, as the current increase may not be enough to fully compensate oil marketing companies (OMCs) for their losses.
How much hike can we expect?
Financial services firm Emkay Global has estimated that petrol and diesel prices could rise by as much as ₹10 per litre in the near term, as oil marketing companies (OMCs) try to offset the impact of higher crude oil prices.
In a report released on 15 May, it stated, “We expect hikes of ₹10/lt to cover roughly 50% of under-recoveries, either in one shot or via creeping hikes over 2-3 weeks.”
The report estimated that OMCs are losing ₹17-18 on every litre of fuel sold, even after the Centre cut excise duty on fuel imports by ₹10 per litre on March 27, 2026. As a result, OMCs are expected to post losses of ₹570-580 billion ( ₹57,000-58,000 crore) this quarter, raising concerns over the sustainability of the business.
Bharat Petroleum (BPCL) continues to incur a revenue loss of 25 to 30 rupees per litre on diesel and 10 to 14 rupees per litre on petrol despite the higher prices, the refiner's chairman said earlier this week.
India's oil ministry has said the government has no plans to provide financial support for refiners.
Analysts at Emkay Global expect, a price hike of ₹10 per liter to cover about half of the losses OMCs are facing. This hike can either be rolled out in one go or through smaller hikes rolled over the next 2-3 weeks.
BPCL, Indian Oil Corp and Hindustan Petroleum together control more than 90% of a network of 103,000 fuel stations and tend to set prices in tandem.
Why have fuel prices been hiked?
One of the key reasons behind the hike is the sharp rise in global energy prices following the outbreak of the conflict in West Asia.
Global oil prices spiked to more than $120 per barrel before easing to around $100-$105 a barrel following the near-closure and severe disruption of the Strait of Hormuz, triggered by the US-Israeli conflict with Iran.
India is among the last major economies to raise retail fuel prices.
State-owned oil firms had kept fuel prices unchanged for 11 weeks despite a surge in input costs, but passed on part of the increase once operations became financially unsustainable, sources said.
Prices have remained frozen since April 2022, except for a one-off reduction of ₹2 per litre each on petrol and diesel in March 2024 ahead of the Lok Sabha elections.
(With inputs from agencies)
