Fuel Prices Surge Again in India Amid Ongoing Crude Oil Crisis

Recent Fuel Price Increases

India is experiencing its third increase in petrol and diesel prices within a span of less than ten days, driven by the ongoing crisis in West Asia affecting crude oil supply. State-owned oil marketing firms have adjusted their retail fuel prices, resulting in a nearly Rs 5 per litre increase in both petrol and diesel rates in a short timeframe.

On Saturday, public sector oil companies raised the prices of petrol and diesel by approximately 90 paise per litre, marking the third adjustment since May 15. This move aims to mitigate the losses incurred from selling fuels below market value amidst rising global crude prices due to supply issues. Despite this increase, oil companies are still facing a loss of Rs 13 for every litre of petrol and Rs 38 for diesel sold (pre-tax), as global prices remain above $100 per barrel.

Prior to the price hike announcement, Union Minister for Petroleum and Natural Gas, Hardeep Singh Puri, indicated that oil marketing companies are collectively losing around Rs 1,000 crore daily by selling petrol, diesel, and LPG below their cost. The total under-recoveries have now reached nearly Rs 1.98 lakh crore.

After considering the recent Rs 3 per litre increase in fuel prices, Prashant Vasisht, Senior Vice President and Co-Group Head at ICRA Ltd., stated that oil marketing companies are expected to incur losses of about Rs 500 crore daily, with further price hikes anticipated soon. In Delhi, petrol prices rose by 87 paise per litre, increasing from Rs 98.64 to Rs 99.51, while diesel prices surged by 91 paise, from Rs 91.58 to Rs 92.49 per litre. This latest adjustment follows previous increases of Rs 3 per litre on May 15 and another hike of 90 paise on May 19.