Indian consumers are ready for a fuel price hike with oil marketing companies (OMCs) making the necessary changes according to rising global crude oil prices. However, not all OMCs will do so uniformly, thereby causing petrol and diesel prices to vary depending on the fuel seller and area.
Why Are Fuel Prices Going Up
The primary reason for the rise in price is the rising cost of crude oil. Brent crude has been trading at over $86 a barrel, from around $83 early in March 2025. The cause of this increase is largely due to foreign supply shortages caused by production cuts by major oil-producing nations, combined with geopolitical tensions on the oil supply lines【8】.
Besides, the Indian rupee depreciation compared to the US dollar has increased the expense of importing crude oil. Since more than 85% of crude oil is imported by India, the fluctuation in exchange rates directly impacts local fuel prices【9】.
Oil Marketing Companies' Response
India's three state-owned Oil Marketing Companies (OMCs)—Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL)—dominate the country's fuel retailing market. Despite these companies holding fuel prices in check for months, they may now have to increase rates in order to cover higher input costs. But that will happen in slow motion, particularly with the state elections pending【9__).
On the other hand, private fuel retailers like Reliance and Shell are not bound by a specific state government and will most likely pass on the price increase to consumers in one go. Some small OMCs and local fuel retailers have already increased their prices【10】.
Impact on Consumers and Businesses
Higher fuel prices will have a far-reaching economic impact:
•Transportation Cost: The operating cost of public and private transport will most likely rise, affecting daily commuters and logistics firms.
•\tInflationary Pressures: Fuel price increases usually result in higher prices for basic commodities, as increased transportation costs are transferred along the supply chain.
\t•\tHousehold Budgets: As fuel prices already crossed ₹100 per liter for petrol in a few states and diesel is approaching ₹90 per liter, consumers will bear the extra burden of costs【9】.
The Chamber of Petroleum Consumers (COPEC) cautioned that if oil prices keep increasing on the international market, further fuel price hikes can be expected in the coming months【10】.
Government and Industry Outlook
Even as crude oil prices have risen, Indian OMCs have been enjoying record profits. Their aggregate net profit in FY 2023-24 was ₹86,000 crore due to favorable refining margins and improved marketing margins【9】. This has led to growing public ire, with people expecting reductions instead of hikes.
Industry experts venture that the government may step in to regulate price increases, especially in light of upcoming elections. Officials at the Ministry of Petroleum and Natural Gas said that any declines in global crude prices would be passed on to consumers, but it is uncertain【9】.
Conclusion
Although fuel prices will rise, the extent to which they will do so will depend on the discretion of the OMC involved. Government-owned entities may move more cautiously, but private and local fuel retailers may increase prices more boldly. As transport and inflation costs escalate, the consumer will have to steel themselves for the financial punch. Whether relief will arrive in the shape of government action or not is yet to be known, but currently the cost of fuel is trending upwards【8】【9】【10】.
blogpay
Total Comments: 0