Key Takeaways:
- Retail fuel prices hiked by ₹3 per litre nationwide on Friday, ending a four-year record freeze.
- Oil companies still lose ₹1,000 crore daily as the hike only covers 10% of costs.
- PM Modi urged Work from Home and EV adoption to curb conflict-driven energy demand.
Petrol and diesel prices increased across India on Friday as state-run oil companies responded to rising global crude prices and supply concerns linked to the ongoing conflict in West Asia.
Petrol prices rose by Rs 3 per litre in Delhi, Rs 3.29 in Kolkata, Rs 3.14 in Mumbai and Rs 2.83 in Chennai. Diesel prices also increased, with hikes ranging between Rs 2.86 and Rs 3.11 per litre in major cities.
In Delhi, petrol now costs Rs 97.77 per litre, up from Rs 94.77, while diesel prices climbed to Rs 90.67 per litre from Rs 87.67.
Global Oil Prices Push Fuel Costs Higher
The increase comes as benchmark Brent crude prices continued to rise amid fears of supply disruptions caused by the conflict in West Asia. Brent crude traded at $106.6 per barrel on Friday, compared with about $78 per barrel on Feb. 27, a day before the conflict began.
India imports nearly 88% of its crude oil and about half of its natural gas requirements. Much of the supply passes through the Strait of Hormuz, a key shipping route affected by the conflict.
Oil marketing companies have faced mounting financial pressure as they continued selling fuel at lower retail rates despite rising import costs.
Union Petroleum Minister Hardeep Singh Puri said on Sunday that oil companies were facing under-recoveries of about Rs 2 lakh crore, with losses projected to touch Rs 1 lakh crore in the current quarter.
He said companies were absorbing losses because they continued selling fuels at unchanged prices while purchasing crude oil and liquefied petroleum gas at elevated international rates.
Government Rules Out Immediate Relief Package
The Union government earlier this week ruled out an immediate bailout package for state-run oil firms despite concerns over mounting losses.
Under-recoveries refer to the gap between the cost of producing and importing Fuel Prices Rise and their retail selling prices.
Officials said oil companies were losing as much as Rs 1,000 crore a day because of rising international energy prices and supply-chain disruptions linked to the conflict.
The government has so far avoided direct intervention in Fuel Prices Rise, even as concerns grow over inflationary pressure and the broader economic impact of higher energy costs.
Modi Urges Citizens to Cut Fuel Consumption
Prime Minister Narendra Modi on Sunday urged citizens and businesses to adopt some work-from-home practices used during the Covid-19 pandemic to help reduce fuel consumption.
Referring to disruptions around the Strait of Hormuz, Modi said imported petroleum products should be used “only as per need” to reduce the conflict’s impact on India’s economy.
Energy analysts said prolonged instability in West Asia could keep crude prices elevated and place additional pressure on India’s import bill and fuel retailers.
The latest Fuel Prices Rise is expected to affect transportation costs and household expenses, with economists warning that higher fuel prices could contribute to inflation in the coming weeks.
