State-owned oil companies have increased the prices of petrol and diesel by around Rs 3 per litre from Friday. The decision was taken in view of mounting losses faced by oil companies amid a sharp rise in international crude oil prices and escalating tensions in West Asia. Petrol prices have been increased by Rs 3.14 per litre, while diesel prices have gone up by Rs 3.11 per litre. According to the revised rates, petrol in the national capital Delhi now costs Rs 97.77 per litre, while diesel is priced at Rs 90.67 per litre. CNG prices are also raised by Rs 2 per kg.
Oil companies had not revised fuel prices during the Assembly elections in Assam, Kerala, Tamil Nadu and West Bengal, despite a sharp surge in global crude oil prices. After the elections concluded, an increase in petrol and diesel prices was widely anticipated. Fearing a hike, long queues of customers were seen at petrol pumps on the night of May 14.
International prices are elevated since the Iran war began on 28 February 2026. But the government-owned oil companies had not changed fuel prices. However, selling fuel below cost started causing heavy losses to the oil companies. Petroleum minister Hardeep Puri recently said that OMC were bearing a loss of Rs 1000 crore everyday.
At the end of March, the government reduced the excise duty on petrol and diesel. The excise duty on petrol was cut from Rs 13 per litre to Rs 3 per litre, while the excise duty on diesel was reduced from Rs 10 per litre to zero.
Amid the war in West Asia, fears of supply disruptions in the Strait of Hormuz pushed international crude oil prices above $120 per barrel. However, prices later eased somewhat and came down to the range of $100-105 per barrel. India imports most of its crude oil requirements, so any increase in global prices has a direct impact on domestic fuel prices.
Economists believe that the increase in petrol and diesel prices will also impact inflation. Higher transportation costs could have a greater effect on the prices of food items, agricultural products, and everyday consumer goods.
The fuel price hike has come at a time when the central government is already emphasizing energy conservation. Recently, Prime Minister Narendra Modi had stressed measures such as saving fuel, promoting work from home, and limiting unnecessary travel in view of the energy crisis and rising import bill. Persistently high crude oil prices could increase pressure on the country’s foreign exchange reserves and current account deficit.
Experts say that if tensions in West Asia continue for a prolonged period and crude oil prices remain elevated, further increases in petrol and diesel prices in the coming months cannot be ruled out.