Petrol and diesel prices were raised again on Tuesday — the second increase in less than a week — as state-run oil marketing companies (OMCs) continued efforts to reduce mounting under-recoveries triggered by elevated crude oil prices, higher freight costs and rupee depreciation amid the Iran conflict and continuing disruptions in West Asia.
Petrol and diesel prices were increased by about 90 paise per litre, taking the cumulative increase over the last five days to nearly ₹4 per litre following the ₹3-per-litre hike announced on Friday — the first fuel price revision in more than four years.
Petrol in Delhi now costs ₹98.64 per litre against ₹97.77 earlier, while diesel prices rose to ₹91.58 from ₹90.67 per litre.
The latest increase comes even as state-run fuel retailers continue to incur heavy losses despite partial price pass-throughs.
What did Petroleum ministry joint seccy say?
Petroleum ministry joint secretary Sujata Sharma had said on Monday that the earlier ₹3-per-litre increase reduced losses by around one-fourth, but oil companies were still losing nearly ₹750 crore per day.
Industry analysts said the latest increase still falls short of offsetting the sharp rise in crude procurement costs following the surge in Brent crude prices above $100 per barrel.
“The recent ₹0.91/litre fuel price hike, following the earlier ₹3/litre hike provides incremental relief to OMCs and transfers some more burden of elevated oil prices from OMCs to end consumers,” said Sourav Mitra, Partner – Oil and Gas, Grant Thornton Bharat.
“Considering reported losses of ₹13-15/litre on petrol and ₹17-19/litre on diesel, this still would be insufficient to fully cushion the financial stress on OMCs arising from elevated Brent crude prices and depreciating rupee,” he added.
Harshraj Aggarwal, Energy Lead Analyst at YES Securities, said petrol and diesel marketing losses remain elevated despite the hikes.
“Petrol/diesel marketing losses still could be at ₹6/litre and ₹12.5/litre respectively,” he said, adding that more calibrated price increases could follow in the coming weeks.
The increase takes retail fuel prices to their highest levels since May 2022. Rates had remained frozen since April 2022 except for a ₹2-per-litre cut in March 2024 ahead of national elections.
Prices vary across states because of local taxes. Petrol in Mumbai now costs ₹107.59 per litre and diesel ₹94.08, while Kolkata prices rose to ₹109.70 and ₹96.07 respectively. In Chennai, petrol prices increased to ₹104.49 and diesel to ₹96.11 per litre.
Compressed natural gas (CNG) prices have also risen twice during the period, including a Re 1-per-kg increase on Sunday after a ₹2-per-kg hike on May 15 in cities such as Delhi and Mumbai.
Private fuel retailers had earlier moved ahead of state-run firms in revising prices. Nayara Energy had increased petrol and diesel prices by up to ₹5 and ₹3 per litre respectively in March, while Shell raised petrol prices by ₹7.41 and diesel by ₹25 per litre from April 1.
The latest revisions are also expected to add pressure on inflation through transportation, freight and logistics costs. According to estimates, the cumulative ₹4-per-litre increase could add nearly 20 basis points to retail inflation over the coming months.
Crisil said rising crude prices could further widen India’s oil trade deficit this fiscal.
“We expect the price of Brent crude to average $90-95 per barrel in fiscal 2027 from $70.3 last fiscal,” the agency said, adding that pressure on the oil trade deficit had intensified as refined petroleum exports declined while imports continued to rise.