On May 17, state-run Oil Marketing Companies (OMCs) in India kept domestic LPG cylinder prices unchanged across major cities, holding the cost of a 14.2-kg household cylinder at ₹913 in Delhi. However, petrol and diesel prices surged by ₹3 per litre, marking the first such increase in four years and pushing fuel rates to their highest levels since May 2022. The moves come as global crude oil prices climb amid escalating geopolitical tensions in West Asia and supply disruptions in the Strait of Hormuz.
The price freeze on domestic LPG cylinders offers temporary relief to Indian households, with rates remaining steady in cities like Delhi (₹913), Mumbai (₹912.50), and Bengaluru (₹915.50). However, commercial LPG prices continue to soar, with a 19-kg cylinder in Delhi now costing ₹3,071.50, up ₹993 from previous levels. Analysts attribute the disparity to the Centre’s strategy to shield consumers from inflationary pressures, even as Oil Marketing Companies (OMCs) face rising input costs due to global energy market volatility.
Petrol and diesel prices were raised by ₹3 per litre on May 16, with the new rates taking effect on May 17. In Delhi, petrol now costs ₹97.77 per litre, up from ₹94.77, while diesel prices increased to ₹90.67 per litre from ₹87.67. The hike reflects the impact of surging global crude oil prices, which have climbed due to the ongoing West Asia conflict and supply disruptions in the Strait of Hormuz, a critical chokepoint for one-fifth of global energy flows.
The latest fuel price revisions mark the first significant increase in four years, with petrol and diesel rates now at their highest levels since May 2022. The Centre had previously cushioned domestic consumers from oil price volatility, but the recent hikes underscore the growing pressure on India’s energy market. Brent crude oil prices surged by 3.35% on May 15, settling at $109.26 per barrel, driven by geopolitical tensions and comments from global leaders that dimmed hopes of a near-term resolution to the West Asia crisis.
State-run OMCs, including Indian Oil, BPCL, and HPCL, are navigating a perfect storm of challenges. India’s heavy reliance on LPG imports makes the domestic market vulnerable to international shocks, including geopolitical tensions, crude oil surges, and currency fluctuations. The Indian Rupee’s volatility has further inflated import costs, compounding the pressure on fuel retailers. Earlier this week, the Centre also raised CNG prices in Delhi and Mumbai by ₹2 per kg and imposed an export duty of ₹3 per litre on petrol.
City-wise fuel prices reveal stark regional variations. In Mumbai, petrol is priced at ₹106.68 per litre, while diesel costs ₹93.14 per litre. Kolkata sees petrol at ₹108.74 per litre and diesel at ₹95.13 per litre. Chennai’s petrol and diesel rates stand at ₹103.77 and ₹95.25 per litre, respectively. The differences stem from varying state-level value-added taxes (VAT), which contribute to the disparity in fuel costs across India.
The price hikes come as India grapples with broader inflationary pressures. Analysts note that the Centre’s decision to hold domestic LPG prices steady is a deliberate move to protect consumers, even as OMCs face mounting input costs. However, the commercial sector continues to bear the brunt of aggressive price revisions, with commercial LPG cylinders now costing over ₹3,000 in several cities. The recent ₹60 increase in domestic LPG prices in March had already strained household budgets.
Global energy markets remain volatile, with the Strait of Hormuz emerging as a critical flashpoint. The waterway, which controls one-fifth of global energy flows, has seen heightened tensions due to the West Asia conflict. Supply chain disruptions and escalating crude oil prices have further exacerbated the situation, forcing countries like India to adjust domestic fuel prices. The recent fuel hikes reflect the broader impact of these geopolitical and economic challenges on energy-dependent economies.
The Union Finance Ministry’s decision to impose an export duty of ₹3 per litre on petrol adds another layer of complexity to India’s fuel pricing strategy. The move aims to balance domestic supply and revenue considerations amid rising global crude oil prices. Meanwhile, the Centre’s efforts to shield consumers from immediate price shocks highlight the delicate balancing act between managing inflation and ensuring the financial viability of state-run OMCs.