Fuel price hike: The price of premium petrol in India has been hiked by ₹2.35 per litre from 20 March amid a fuel crisis due to the war in West Asia, according to an ANI report on Friday. Oil marketing companies (OMCs) have, however, kept the price of normal fuel unchanged, it added.
“Prices of Bharat Petroleum’s Speed, Hindustan Petroleum’s Power, and Indian Oil’s XP95 have been increased by ₹2.09– ₹2.35/litre,” according to ANI.
OMCs revise petrol and diesel prices every day at 6 AM to keep domestic fuel prices aligned with international crude oil prices and currency exchange rates. The retail rate is influenced by several factors, such as international crude oil prices, the rupee-dollar exchange rate, and taxes imposed by the central and state governments.
OMCs to absorb higher crude costs?
Earlier today, a Kotak Institutional Equities report noted that OMCs will have to absorb the cost of higher crude oil imports amid negative public sentiment over the liquefied petroleum gas (LPG) shortage, as per another ANI report.
It added that the United States and Israel's war on Iran and disruption in the Strait of Hormuz have impacted the crude oil outlook for FY27.
Why is the price of normal fuel unlikely to increase?
- According to Kotak Institutional Equities, negative public sentiment amid LPG shortages makes large petrol/diesel price hikes very difficult.
- It added that OMCs have benefited from elevated marketing margins in the past few years, but weak earnings could erode the buffer.
How much could the oil price increase?
The Kotak Institutional Equities report also revised its oil price assumptions to $85 per barrel for FY27, $75/barrel for FY28 and long-term estimates to $65/barrel. This is up from the previous estimates of $65/barrel for FY27 to FY28 and $70/barrel in the long term, it added.
Israeli strikes on the South Pars gas field late on 18 March have intensified the situation amid the ongoing war in the Middle East, with Iran's counter-attacks on Qatar's energy infrastructure affecting 17% of the country's liquefied natural gas export capacity.
Qatar's LNG producing Trains 4 and 6, with a combined production capacity of 12.8 million tonnes per annum (MTPA), have been impacted. Train 4 is a joint venture between QatarEnergy (66%) and ExxonMobil (34%), while Train 6 is a joint venture between QatarEnergy (70%) and ExxonMobil (30%).
Why is India feeling heat from Middle East crisis?
The situation in West Asia has raised concerns for India, which relies heavily on Qatar for its energy requirements. Reduced supply from one of its largest suppliers could impact both availability and pricing in the domestic market.
Notably, the war in Iran has led to the closure of the Strait of Hormuz, a critical waterway which transports around 85-90% of India's LPG imports from West Asia, including Saudi Arabia and Qatar.
City-wise fuel rates on 20 March
The following retail rates by OMCs are currently active in major cities across India. Charges differ across states due to taxes imposed by the central and state governments.
