Amid the ongoing conflict in Iran, domestic prices of petrol and diesel in the country have remained stable for a long time. While many countries have already passed on the burden of rising global crude oil prices to consumers, retail prices of petrol and diesel in India have remained unchanged for quite some time. As a result, fuel retailers are incurring huge losses—specifically, a loss of ₹20 per liter on petrol and ₹100 per liter on diesel.
Loss making refineries
On one hand, the government is protecting consumers from price fluctuations by keeping petrol and diesel prices stable amid global uncertainties; However, this strategy is forcing fuel retailers to bear the financial burden. According to reports—which cite industry experts who spoke on condition of anonymity—if the crisis in the Middle East persists and international oil prices remain between $70 and $80 per barrel, it may become even more difficult for refineries to withstand such fluctuations.
Are the prices of petrol and diesel going to increase?
Industry experts predict that if the current trend of fluctuations in international crude oil prices continues, oil marketing companies may eventually pass on a part of their revenue losses on petrol and diesel to consumers—possibly some time after the conclusion of the upcoming assembly elections. Before the outbreak of hostilities in Iran, the price of benchmark Brent crude was $72.87 per barrel; By Wednesday, it rose nearly 40% to $101.91 per barrel, and by Thursday, prices had crossed the $103 per barrel mark.
What is the government saying?
In a recent sector note, Kotak Institutional Equities commented that amid rising crude oil prices, it is becoming difficult for retail companies to maintain the current cap on fuel prices for long. Given this, it is possible that after the conclusion of the ongoing assembly elections—which will run till April 29—domestic prices of petrol and diesel may see a steep increase of ₹25–28 per litre.
However, the government has clearly denied this. Petroleum Ministry Joint Secretary Sujata Sharma has clearly stated that despite the rise in international prices, the government has no proposal to implement an increase of ₹25–28 in retail prices. The government has advised the public not to pay attention to these rumors spreading on social media, which are being spread only with the intention of spreading panic.