Winning Bizness Desk
Mumbai. Petrol and diesel prices have gone up by ₹3 per litre across the country, bringing an end to nearly two years of price stability. The revised rates came into effect from May 15, pushing petrol prices in Delhi to ₹97.77 per litre and diesel to ₹90.67 per litre. The hike has triggered political attacks, public concern and fears of a wider inflation wave as transport and farming costs are expected to rise sharply in the coming weeks.
Oil companies, however, claim the increase is still not enough to cover mounting losses caused by soaring international crude prices. According to government estimates, public sector fuel retailers are still losing nearly ₹25-30 per litre on petrol and diesel sales despite the latest revision. Alongside fuel, CNG prices have also been increased by up to ₹2 per kg in several cities. In Delhi, CNG now costs ₹79.09 per kg.
Global crude shock behind fuel revision
The latest increase has largely been linked to rising crude oil prices in the international market following tensions and conflict in West Asia. Before the Iran-US conflict escalated, crude oil prices hovered around 70 dollars per barrel. They have now crossed the 100-dollar mark, putting enormous pressure on oil marketing companies.
Government officials say fuel companies had been absorbing losses for months to shield consumers from sudden inflationary pressure. Petroleum Ministry Joint Secretary Sujata Sharma stated that Indian Oil, Bharat Petroleum and Hindustan Petroleum were collectively suffering losses of nearly ₹30,000 crore every month due to high global oil prices and controlled retail rates.
Experts believe the current ₹3 increase is only a partial correction and more hikes may follow if crude prices remain elevated for a longer period.
How common people may feel the impact
The diesel price rise is expected to affect household budgets directly because transportation and agriculture heavily depend on diesel consumption.
Key areas likely to be impacted include:
- Transport costs may increase as truck and tempo operators raise freight charges
- Prices of vegetables, fruits and grocery items transported from other states could rise
- Farmers may spend more on tractors and irrigation pump sets during cultivation
- Bus, school transport and auto-rickshaw fares may also witness a revision
Industry analysts warn that inflationary pressure may gradually spread from fuel stations to kitchens and local markets over the next few weeks.
Political attacks intensify over hike
The fuel price revision has sparked sharp political reactions across the country. Leader of Opposition Rahul Gandhi blamed the Central government for burdening ordinary citizens. He said people had already suffered a “₹3 shock” and warned that more recovery could happen in instalments in the future.
The government, however, defended the decision by pointing to the extraordinary rise in global energy prices. Officials argued that neighbouring countries such as Pakistan, Nepal and Sri Lanka had already raised fuel prices by 15% to 20% during the West Asia crisis, while India had delayed any increase for several months to protect consumers.
Before this revision, fuel prices had remained unchanged since March 2024. Ahead of the Lok Sabha elections that year, the government had reduced petrol and diesel prices by ₹2 per litre as a relief measure.
Companies still far from break-even point
According to market experts, oil companies are still operating far below break-even levels. Estimates suggest petrol prices may need to rise by another ₹28 per litre and diesel by nearly ₹32 per litre for companies to completely recover their losses under current crude price conditions.
Current Delhi fuel price structure includes:
- Petrol dealer price: ₹77.49 per litre
- Diesel dealer price: ₹74.42 per litre
- Average dealer commission on petrol: ₹4.40
- Average dealer commission on diesel: ₹3.03
- VAT on petrol: ₹15.88
- VAT on diesel: ₹13.22
Officials say global supply disruptions linked to the Iran conflict remain the biggest concern for the energy market. Any further escalation may push crude prices even higher.
PM calls for cautious fuel consumption
Prime Minister Narendra Modi recently appealed to citizens to use petrol, diesel and gas carefully in view of the volatile geopolitical situation in West Asia. Speaking at a programme in Telangana, he stressed the need to reduce dependence on imported petroleum products and use fuel only according to necessity.
The government had earlier reduced special excise duty on petrol and diesel by ₹10 per litre each to keep retail prices stable. Following the cut, central excise duty on petrol had come down from ₹21.90 to ₹11.90 per litre, while diesel duty was reduced from ₹17.8 to ₹7.8 per litre.
Despite those measures, the latest surge in global crude prices has now forced companies to pass part of the burden on to consumers, raising fears that fuel prices may continue climbing if the international crisis deepens further.
