A revision in petrol and diesel prices cannot be ruled out in the near term, government sources told PTI on Friday, as state-run oil marketing companies continue to bleed on every litre sold amid a steep and sustained climb in global crude oil prices.

Since April 2022, Indian OMCs (Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum) have maintained frozen petrol and diesel prices. In this period, the global crude oil prices have fluctuated between almost $150 per barrel after the Russia-Ukraine war, then calmed down to about $70 per barrel last year and has now shot up drastically once again because of the current Middle East conflict. All that has not been reflected in retail pump prices in India.
That streak is now in distress.

How Deep Are the Losses?

Industry sources had earlier revealed that the three OMCs were incurring losses of up to Rs 2,400 crore per day at the peak last month. After the government lowered excise duties by Rs 10 each on petrol and diesel, that figure has come down to around Rs 1,600 crore per day.
Last week, a senior oil ministry official said that state-controlled fuel retailers were already incurring losses of approximately Rs 20 per litre on petrol and almost Rs 100 per litre on diesel at the current crude prices. In a note dated April 24, Emkay Global said a 10 percent increase in retail petrol and diesel prices now seems probable, without a solution to the Strait of Hormuz. Kotak Institutional Equities estimates that at the existing levels of crude, petrol and diesel prices might have to increase by Rs 25 to Rs 28 per litre to reflect the underlying costs, but any increase is expected to be done slowly to weigh inflation issues against the need to decrease OMC losses.
Individually, the Macquarie Group has projected that at crude oil prices of $135-165 per barrel the OMC losses may increase to Rs 18 per litre on petrol and Rs 35 per litre on diesel.
Puneet Pal, Head of Fixed Income at PGIM India Mutual Fund, observed that commercial LPG prices have already increased twice, and excise duty on petrol and diesel is also cut to soften the blow on OMCs. He further stated that the Middle East conflict will directly influence the FY27 inflation and economic growth due to the length of the conflict.

What Has Already Been Raised

While petrol and diesel prices have been held back, state-run oil companies have not kept everything frozen. Rates for commercial LPG, industrial diesel, 5-kg LPG cylinders, and jet fuel supplied to international airlines have all been revised upward in line with higher input costs. These segments are priced more dynamically and are insulated from the political sensitivity that surrounds fuel prices at the pump.

The Crude Oil Context

International oil prices briefly touched $126 per barrel this week, a four-year high, before easing slightly to trade above $110. The surge has been driven primarily by restricted ship movements through the Strait of Hormuz following the US-Israel strikes on Iran in February and Tehran’s subsequent retaliation. Crude oil, which averaged around $70 per barrel last year, has averaged over $114 per barrel this month.
India’s crude import bill has risen by an estimated $190 to $210 million per day as a result, even as import volumes have declined by 13 to 15%. For OMCs, Kotak estimates the delay in passing on higher costs has led to an incremental hit of around Rs 270 billion per month.

Government’s Official Position

The industry through IOC announced that the prices of petrol, diesel and domestic LPG would not increase at the moment. In a press conference, Joint Secretary at the Ministry of Petroleum and Natural Gas, Sujata Sharma, indicated that no plans are made to revise fuel prices in the short term.
The government also acted to curb misinformation that was circulating on social media. This week, the Press Information Bureau debunked a viral report that the Ministry of Petroleum had issued an order to increase petrol by Rs 10 per litre and diesel by Rs 12.50 per litre. PIB proved the order to be a fake one and no such order was issued.

The Election Factor

As West Bengal Assembly elections were just over, Tamil Nadu and Assam also in the spotlight, analysts had been extensively anticipating that the government would keep the fuel prices stable during the polling. The government has been historically opposed to allow any increase in fuel prices that may turn out to be a political liability. With the polling in West Bengal over now, April 29, the calculus can start to change.
Kotak observed that analysts projected that fuel price adjustments would come shortly after the election process was over. The speed at which the government responds or keeps absorbing the losses in the form of the OMCs will depend on the duration of the time in which the crude oil will remain high and whether there is any progress in the Strait of Hormuz re-opening.

What a Price Hike Would Mean for the Economy

A Rs 25 to Rs 28 per litre hike, if it materialises, would not sit quietly in the economy. Fuel prices feed directly into transport costs, which in turn push up the price of vegetables, food staples, and manufactured goods. India’s retail inflation, already under pressure from elevated crude prices and a weakening rupee, could see a meaningful spike in the months following any revision.
CareEdge Ratings has projected that India’s merchandise trade deficit could widen to $422 billion in FY27, notably higher than recent years, as elevated global crude prices inflate the import bill. A simultaneous hike at the pump would add to household expenses at a time when consumers are already dealing with rising costs across the board.
For the government, the choice is uncomfortable either way. Continuing to absorb losses through OMCs strains public sector balance sheets and squeezes the fiscal deficit. Passing on the costs risks stoking inflation and denting consumption, both of which the RBI and the Finance Ministry are already watching closely. The rupee falling to record lows adds another layer — a persistently hawkish Fed stance and sustained FII outflows mean the RBI has limited room to diverge significantly on policy rates without risking further capital flight. Higher domestic inflation would only complicate that further.
The most likely outcome, analysts say, is a phased increase rather than a one-shot adjustment, spread out over several months to soften the impact on consumers and give the RBI time to manage the inflationary pass-through.
Petrol in Delhi currently stands at Rs 94.77 per litre and diesel at Rs 87.67 per litre. In Mumbai, petrol is at Rs 103.49 per litre and diesel at Rs 90.03 per litre. Prices in cities like Bengaluru, Hyderabad, and Kolkata continue to hover above Rs 100 per litre for petrol.