New Delhi: Petrol and diesel prices were finally raised by Rs 3 per litre each on Friday, marking the first increase in more than four years, as fuel retailers faced mounting losses from surging global crude prices.
The move came 16 days after assembly elections concluded in Assam, Kerala, Tamil Nadu and West Bengal. Fuel prices had stayed unchanged through the polling period despite a sharp rise in international oil prices triggered by the West Asia conflict.
In the national capital, petrol was hiked to Rs 97.77 per litre from Rs 94.77, while diesel now costs Rs 90.67 per litre against Rs 87.67 earlier, industry sources said.
Follow The PSUWatch Channel on WhatsApp
Increase after four-year freeze
Prices have remained frozen since April 2022, except for a one-off reduction of Rs 2 per litre each on petrol and diesel in March 2024, just before the Lok Sabha elections. Rates were last increased in April 2022.
In Mumbai, petrol now costs Rs 106.68 a litre and diesel Rs 93.14 per litre. In Kolkata, petrol has risen to Rs 108.74 per litre and diesel to Rs 95.13, while in Chennai petrol now costs Rs 103.67 and diesel Rs 95.25 per litre.
Rates vary across states because of differences in value-added tax.
Although fuel prices are officially deregulated, revisions are often shaped by political considerations.
Global energy prices surged after the US-Israel attack on Iran on February 28, and Tehran’s retaliation effectively shut down the Strait of Hormuz, the sea lane through which a fifth of the world’s oil and gas transits. Crude oil, the raw material for making petrol and diesel, climbed above USD 120 per barrel at the peak of the West Asia conflict, compared with the USD 70-72 range before the conflict.
More recently, prices have eased but remained elevated in the USD 104-110 per barrel range. This led to massive losses for state-owned fuel retailers, even as retail rates stayed unchanged while five key states went to polls.
Follow The PSUWatch Channel on WhatsApp
Before Friday’s decision, the oil companies were losing Rs 14 per litre on petrol, Rs 42 per litre on diesel and Rs 674 per litre on cooking gas LPG.
OMCs bled over Rs 1 lakh crore
Earlier this week, Oil Minister Hardeep Singh Puri said the three fuel retailers were losing about Rs 1,000 crore per day, and that the cumulative losses in a quarter were enough to wipe out all the profit they made in a full year. He put the losses at about Rs 1 lakh crore.
To cushion consumers from rising global prices, the government on March 27 reduced excise duty on petrol and diesel by Rs 10 per litre each.
Private fuel retailers had already raised pump prices. Nayara Energy, the country’s largest private fuel retailer, raised petrol prices by Rs 5 per litre and diesel by Rs 3 per litre in March, while Shell increased petrol prices by Rs 7.41 per litre and diesel by Rs 25 per litre from April 1. In Bengaluru, Shell sells petrol at Rs 119.85 per litre and diesel at Rs 123.52 per litre.
WPI & CPI inflation already rocketed
Domestic cooking gas LPG prices were raised in March by Rs 60 per cylinder, but they remain well below the actual cost.
Industry sources said the price hike appears calibrated — sufficient to partly ease margin pressure on oil companies without triggering a major inflationary shock.
Follow PSU Watch on LinkedIN
The increase, however, will have some impact on inflation, they said.
India’s retail inflation, measured by the Consumer Price Index (CPI), rose to 3.48 per cent in April 2026 from 3.40 per cent in March, while wholesale price inflation (WPI) surged to 8.3 per cent, a 42-month high, driven by a sharp rise in fuel and energy prices amid elevated global crude oil rates.
Petrol and diesel do not have a standalone category in the CPI basket, but are included under the broader “transport and communication” component and “fuel and power” category. Petrol and diesel themselves carry relatively smaller but still significant weights through transport-related items, and economists say fuel price hikes have a wider indirect impact because they raise freight, logistics and input costs across sectors.
State-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) had suspended daily price revisions in April 2022 to protect domestic consumers from a steep rise that was warranted after international oil prices surged following Russia’s invasion of Ukraine.
Follow PSU Watch on LinkedIN
They incurred heavy losses in the first half of the 2022-23 fiscal year, which they later recovered when rates eased in subsequent months.
But the West Asia war has again pushed international oil prices up by more than 50 per cent.
The basket of crude oil that India imports averaged USD 69 per barrel in February, before the war in West Asia broke out. It averaged USD 113-114 per barrel in the following months.
(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)