Have you wondered why the retail petrol and diesel prices in India have remained largely unchanged since August 2022, even as global crude oil prices saw a sharp move and domestic refining margins cooled?
For example, at Delhi pumps, petrol was priced at Rs 96.72 per litre in August 2022, before being cut to Rs 94.72 in March 2024. In October 2024, this rate was revised to Rs 94.77, which remained the same as of December 2025. For Diesel, the price was set at Rs 89.62 per litre in August 2022, it went to Rs 87.62 in March 2024 and then rose to Rs 87.67 in October 2024.
However, in sharp contrast to this, the crude prices have seen significant volatility. As per the report, India’s monthly average Indian Basket of crude oil fell from $97.40 per barrel in August 2022 to $64.31 per barrel in November 2025, with several swings in between. International Crude prices have been trading below $70 per barrel in FY26 so far, after touching lows of $64.04 in May 2025.
According to data submitted by the Union Petroleum Ministry in Parliament on Monday, this is because of multiple factors.
Retail fuel prices are market-determined
Despite the correction in crude, the government said petrol and diesel prices are market-determined, with oil marketing companies (OMCs) factoring in international product prices, exchange rates, taxes, insurance and freight costs while fixing retail rates.
Wide variation in fuel prices across states
It is important to note that fuel prices vary across states due to a series of taxes, local levies, and other costs. The Value Added Tax make up 50-60% of the total crude rates along with state levies.
The report stated that as of December 5, 2025, Andhra Pradesh reported the highest petrol price at Rs 109.74 per litre, followed by Kerala at Rs 107.48 and Telangana at Rs 107.46. Delhi remains among the cheaper markets at Rs 94.77 per litre.
Among larger cities, petrol is priced at Rs 103.50 per litre in Mumbai, Rs 102.92 in Bengaluru, and Rs 100.80 in Chennai. Diesel prices show a similar divergence, ranging from above Rs 97 per litre in Andhra Pradesh to just over Rs 78 per litre in Andaman & Nicobar Islands.
Refining margins normalised after post-pandemic spike
Refining profitability, which surged after the pandemic, has also moderated. Indian Oil’s gross refining margin (GRM) fell to $4.8 in FY25 from $19.52 per barrel in FY23 before recovering to $6.32 in the first half of FY26.
Bharat Petroleum’s GRM declined to $6.82 in FY25 from $20.24 per barrel in FY23, while HP’s GRM fell to $5.74 from $12.09 over the same period.
The government told Parliament that product-wise marketing margins are not disclosed by public-sector OMCs due to commercial confidentiality and cost apportionment complexities.
Ethanol blending rises, but raises fuel cost
The other big development in India’s automotive fuel segment – the ethanol blending programme has expanded rapidly, with ethanol blended into petrol rising more than three-fold over five years. Ethanol blending increased to 1,022.4 crore litres in 2024-25 (19.24%) from 302.3 crore litres in 2020-21 (8.1%), moving closer to the government’s 20% blending target.
However, ethanol is now costlier than refined petrol. The government said the average procurement cost of ethanol in 2024-25 stood at Rs 71.55 per litre, including transportation and GST, which is higher than the cost of refining petrol.
Even so, petrol prices, including ethanol-blended petrol, continue to be market-determined, with OMCs taking pricing calls based on international trends and domestic market conditions.