Fuel pricing debate in India has intensified after a report by Kotak Institutional Equities warned of a potential increase in petrol and diesel prices, even as the Ministry of Petroleum and Natural Gas firmly denied any such move.
Kotak flags pressure from global oil volatility
Kotak’s report makes a blunt assessment: “The issue is no longer if, but when and by how much,” pointing to mounting stress in the system as global oil prices remain elevated.
According to the report shared by Kotak Institutional Equities, disruptions in crude flows through the Strait of Hormuz amid the ongoing West Asia conflict have kept oil prices elevated and volatile since early March.
Kotak noted that “oil prices have been elevated and volatile since early March,” adding that “a normalization of flows appears unlikely in the absence of a comprehensive truce.”
The report also said that petrol and diesel prices could rise by Rs 25–28 per litre after the conclusion of Assembly elections on April 29, if elevated crude oil prices persist and there is no easing of geopolitical tensions.
Kotak also noted that India’s crude import bill has surged by up to $210 million per day, even as import volumes declined, placing significant financial stress on oil marketing companies.
According to the report, “India’s crude import bill has increased by US$190–210 million per day,” displaying the sharp rise in global prices. The Indian crude basket itself has jumped by over $50 per barrel in recent weeks.
Kotak has estimated an “incremental monthly burden of Rs 270 billion on Indian refiners,” warning that current pricing is not sustainable. It adds that “elevated oil prices warrant commensurate retail fuel price increases to contain refiners’ losses and signal demand moderation.”
Crude shock despite lower imports
Interestingly, according to a data shared by Kotak, India is importing less but paying more.
Crude imports fell 17% year-on-year in March 2026 and LPG imports also declined 12% YoY. Yet, the import bill surged by $190–210 million per day.
This paradox is highlighted by a sharp rise in global oil prices. Kotak noted that the Indian crude basket jumped from $67/bbl to $114 in March and $120 in April.
Petrol Price Hike: Kotak’s Warning vs Govt’s Denial
Rs 270 billion monthly burden on refiners
With retail prices frozen, oil marketing companies are absorbing the shock.
Monthly impact of higher crude costs: Rs 550–594 billion
Relief from excise duty cuts: Rs 134 billion
Price adjustments (LPG/ATF etc.): partial offset
Net burden on refiners: Rs 270 billion per month
Margins under pressure, capacity at risk
The report flags deeper structural stress:
Export taxes and weak margins are making exports unattractive
Refining margins have turned negative in some cases
“Refiners could cut runs and/or shut capacity” if conditions persist
The report also revealed distortions in how India’s crude basket is calculated:
Prices spiked sharply in March due to changes in crude composition
Dubai/Oman crude share dropped sharply from 78% to 39%
Adjustments masked the actual price surge to some extent
Even after revisions, crude remained elevated, reinforcing the underlying pressure.
Centre rejects hike speculation
Meanwhile, the Ministry of Petroleum and Natural Gas has categorically rejected any suggestion of an imminent fuel price hike.
In a statement, the ministry said, “There are no such proposals under consideration by the Government. Such news items are designed to create fear and panic amongst the citizens and are mischievous and misleading.”
India ‘insulated’ from global price surge
The Ministry further said that India remains an outlier globally, with petrol and diesel prices unchanged over the past four years.
It added that both the government and public sector oil companies have taken proactive measures to shield consumers from rising international oil prices, including tax adjustments and pricing controls.
Why after elections?
Fuel prices in India are highly sensitive. They directly impact daily expenses and inflation, which in turn influence voter sentiment. Governments typically avoid increasing petrol and diesel prices during election periods to prevent public dissatisfaction.
Diverging views on sustainability
While the government maintains that consumers are being protected, analysts argue that the current pricing freeze may not be sustainable in the long run.
According to Kotak, refiners are bearing an additional monthly burden of around Rs 270 billion due to elevated crude prices, only partially offset by recent excise duty cuts and modest increases in other fuel categories.