Customers at petrol pumps will now only be able to procure diesel directly into vehicle tanks or in containers approved by the Petroleum and Explosives Safety Organization (PESO). This provision is part of the Motor Spirit and High-Speed Diesel (Temporary Regulation of Supply through Retail Outlets) Order, 2026 notified by the Ministry of Petroleum and Natural Gas on Friday.
For the time being, this regulation will remain in effect for 90 days. The Ministry stated that this step has been taken to curb the hoarding, resale, and black marketing of diesel. However, this move is expected to cause severe hardships for farmers.
Farmers require diesel not just for tractors, but also to operate various other types of agricultural machinery. Under the new rules, they will no longer be allowed to fetch diesel in ordinary cans for these machines. Instead, they will have to purchase PESO-approved cans. On average, a 20-litre PESO-approved container costs around Rs 2,000.
Furthermore, while operating tractors in the fields, farmers frequently buy extra fuel in large drums alongside filling up the tractor's tank, ensuring they can refuel on-site during heavy fieldwork. With the new restrictions in place, they will now be forced to drive their tractors all the way to the petrol pump every single time they need a refill.
Price Arbitrage Triggers Extraordinary Demand Surge
According to the Ministry, government's intervention comes in response to an unprecedented, uneven surge in retail diesel demand. Retail diesel has become roughly Rs 40 per litre cheaper than bulk diesel. Consequently, industrial, commercial, and institutional buyers have heavily shifted their procurement away from dedicated consumer pumps and into public retail outlets to exploit this massive price difference. This surge is further compounded by a 58% drop in High-Speed Diesel (HSD) sales at private OMCs during May 2026 due to higher private pricing. Data from May 2026 reveals that 327 districts recorded over 10% growth in retail diesel sales compared to last year, with 80 districts experiencing spikes exceeding 30%.
New Fuel Dispensing Restrictions Enforced
To protect ordinary citizens and essential services from localized supply shortages caused by bulk diversion, the Central Government has directed Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) to immediately enforce the following mandates:
200-Litre Cap: Retail outlets are strictly prohibited from dispensing more than 200 litres of diesel per day per customer or vehicle. Furthermore, fuel can only be dispensed directly into vehicle tanks or Petroleum and Explosives Safety Organization (PESO) approved containers.
Resale Prohibition: Diesel purchased at retail pumps cannot be resold under any circumstances.
Bulk Consumer Ban: Industrial, institutional, and commercial buyers are explicitly banned from purchasing fuel at retail outlets and must source their diesel exclusively through dedicated consumer pumps.
Strict Penalties Under Essential Commodities Act
The government noted blatant instances of bulk buyers procuring massive quantities of diesel in jerry cans for illegal resale. OMCs and retail outlet dealers will be held directly responsible for enforcing these restrictions.
State governments and Union Territory administrations have been instructed to crack down on malpractices. Anyone found violating the new order will face strict penalties and legal action under the Essential Commodities Act, 1955.
Government Reassures Public: No Fuel Shortage
The Ministry emphasized that this order is a temporary market-correction mechanism rather than a rationing measure, reassuring the public that there is absolutely no shortage of petrol or diesel in the country. The 200-litre daily cap is designed to far exceed the daily requirements of any private car or two-wheeler owner.