Petrol, diesel prices may surge ₹25–28 per litre after elections amid rising crude oil prices and mounting pressure on oil marketing companies.
Petrol, diesel price increased news in India Today: The recent speculation over forthcoming petrol and diesel price hikes of ₹25–28 a litre in India is drawing attention, especially in light of the current Assembly elections being held in both West Bengal and Tamil Nadu. However, recent reports using information from the Kotak Institutional Equities research firm discuss several other important factors, including continued increases in global crude oil prices and the increased pressure on oil market companies resulting from such increases, as reasons to be concerned about possible future increases in petrol or diesel price levels.
The Indian Ministry of Petroleum and Natural Gas denies that any increase in petrol or diesel prices is being considered. In their recent post on social media platform X, the Ministry stated that these reports are “fake news” and that they are not currently reviewing any plans for increasing the price of petrol or diesel.
In addition, the Indian government has made statements that regional reports are not only misleading but also may be purposely causing unnecessary anxiety for citizens. The Indian government also noted that India is one of the few countries to have not implemented any petrol or diesel price increases in the last four years, despite fluctuations in the global price of crude oil.
Ministry officials emphasized that both the Indian government and oil public sector undertakings have implemented many measures to protect consumers from rapidly increasing prices due to global price increases over the last several years, which have kept domestic petrol and diesel prices relatively stable.
Although Government Officials have stated that they do not currently intend to increase Fuel Prices, many people are concerned about the increasing cost of fuel due to international events affecting Oil Prices, including continued tension in the Middle East, particularly in the area of the Strait of Hormuz, which is an essential shipping lane for global Oil Supply.
Crude Oil Prices have recently risen to nearly US$120.00 in the past month but have dropped back to approximately US$100.00.
The large fluctuation in crude prices has also created a much larger difference between international and Indian retail diesel and petrol prices.
According to Kotak Institutional Equities, state-owned oil refiners are taking on much of the added financial burden from the widening difference between international and domestic diesel and petrol prices.
Fuel prices in India have been holding fairly steady during the most recent weeks of the election cycle. Traditionally, during an election season, adjustments to fuel prices halt until after election season ends due to inflation fears.
This delay in price adjustments has caused a significant burden to importers of crude oil in India. According to estimates from CNBCTV18, on average India’s crude import bill has increased by $190–210 million per day due to 13–15% decline in crude volumes purchased.
The financial hardship is even amplified for oil marketing companies, who Kotak estimates are incurring an additional burden of ₹270 billion monthly as a result of the current disparity between crude oil costs and retail price for fuel.
As of current prices for major cities are as follows:
Delhi- Petrol ₹94.77/litre| Diesel ₹87.67/litre
Mumbai- Petrol ₹103.49/litre|Diesel ₹90.03/litre
In cities like Bangalore/Hyderabad and Kolkata; petrol price remains above ₹100 per litre.
Several factors affect the price of fuel in India. These include:
1. Cost of Crude Oil in the International Market
2. Exchange rate of Rupee to US Dollar
3. Taxes imposed by Central and State Governments
4. Transportationand Distribution Costs
Since India imports the majority of its crude oil, any movement in the price of crude oil internationally impacts the price of fuel domestically.
2004-2010: Price of Fossil Fuels (Petrol and Diesel) Relatively Low (30 to 50 in INR) Due to Government Regulation And Subsidies.
2010-2014: Prices Suddenly Increased Due To Worldwide Crude Oil Surge
2014-2016: Price Reduction Because Of Lower Cost Of Crude Oil Distribution Around The World For A Brief Period
2017 to 2022: Huge Increase In prices due primarily to Increased Taxes, And Price Volatility of Crude Oil
2023 – 2026: Price Stabilisation And Long Term Increase Due To Global Geopolitical Developments Affecting Crude Oil Production; Also, By Currency Fluctuation In The U.S.
(₹ per litre, approx. average)
| Year | Petrol Price (₹/L) |
|---|---|
| 2004 | 34 |
| 2005 | 38 |
| 2006 | 41 |
| 2007 | 44 |
| 2008 | 51 |
| 2009 | 48 |
| 2010 | 52 |
| 2011 | 63.77 |
| 2012 | 68.57 |
| 2013 | 72.26 |
| 2014 | 72.43 |
| 2015 | 60.50 |
| 2016 | 64.38 |
| 2017 | 69.99 |
| 2018 | 78.52 |
| 2019 | 73.83 |
| 2020 | 80.43 |
| 2021 | 95.41 |
| 2022 | 95 |
| 2023 | 98 |
| 2024 | 100 |
| 2025 | 105.01 |
| 2026 | ~102 |
(Petrol prices have nearly tripled since 2004, driven by crude oil prices, taxes, and rupee depreciation)
(₹ per litre, approx. average)
| Year | Diesel Price (₹/L) |
|---|---|
| 2004 | ~22–23 |
| 2005 | ~28 |
| 2006 | ~30 |
| 2007 | ~32 |
| 2008 | ~38 |
| 2009 | ~36 |
| 2010 | ~40 |
| 2011 | ~49 |
| 2012 | ~53 |
| 2013 | ~54 |
| 2014 | ~55 |
| 2015 | ~46 |
| 2016 | ~50 |
| 2017 | ~58 |
| 2018 | ~67 |
| 2019 | ~64 |
| 2020 | ~70 |
| 2021 | ~85 |
| 2022 | ~86 |
| 2023 | ~89 |
| 2024 | ~90 |
| 2025 | ~90–92 |
| 2026 | ~87–95 |
(Diesel has also seen a sharp rise, especially after deregulation and tax hikes.)
The cost of fuel in India has consistently increased over the past twenty years with the price of petrol rising from an average of ₹34/litre in 2004 to the current price of over ₹100/litre which makes it one of the largest contributors to the expense of households and to inflation.
While the government has denied an impending price increase, if a significant fuel price increase occurs, it may have significant ramifications in terms of the economy.
Some potential effects of increased fuel prices include:
In summary, fuel price changes typically will affect overall cost of living.
The government stated that it, along with oil PSUs, has taken consistent steps to shield consumers from global price spikes, including excise duty cuts and other policy measures.
Since Kotak Institutional Equities (cited from CNBCTV18), crude oil prices will not continue being able to keep from rising dramatically in the future based on the current range created between the current crude prices and the associated selling prices.
Although there is no immediate increase expected by the governments, one cannot expect to see much price variation going forward based solely on each country’s respective crude prices moving higher or lower and/or because of global crude prices alone moving higher or lower and as a result; global developments play an essential role in influencing crude pricing going forward as well.
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