Fuel Price Hike Likely As Oil PSUs Face Massive ₹30,000 Crore Monthly Losses

India could soon witness a rise in petrol, diesel and LPG prices as state-run oil companies continue suffering massive financial losses amid surging global crude oil prices triggered by the escalating West Asia conflict.

Government officials said public sector oil companies are currently losing nearly ₹30,000 crore every month by selling fuel below market rates.

Top Summary

• What happened: Government officials indicated fuel price hikes may become unavoidable due to massive oil company losses.
• Why it matters now: Rising crude oil prices and geopolitical tensions are sharply increasing India’s fuel import costs.
• What changes for people: Petrol, diesel and LPG prices could rise in the coming days, potentially affecting inflation and household expenses.
• Who is affected: Consumers, transport sectors, oil companies and the broader Indian economy.

Officials stated that both the government and oil marketing companies have been absorbing higher fuel costs for more than two months, but acknowledged the situation cannot continue indefinitely.

The comments come as crude oil prices remain elevated globally following renewed instability in the Middle East and disruptions linked to the Strait of Hormuz.

Crude Oil Prices Surge Sharply

According to officials:

• Average crude oil prices for Indian refiners rose from around $69 per barrel in February to $114.4 per barrel last month.
• May crude prices have averaged around $105 per barrel so far.
• Brent crude hovered close to $100 per barrel on Friday.

The weakening Indian rupee against the US dollar has further increased import costs for refiners.

Government officials said India has so far avoided the sharp fuel price hikes implemented by countries such as:

• Japan
• Spain
• France

which reportedly increased fuel prices by 30–35% after the West Asia conflict intensified.

Government Signals Financial Pressure

Sujata Sharma said oil companies are purchasing expensive crude and gas globally while continuing to sell fuel domestically at lower prices.

The government had earlier reduced excise duties:

• ₹13 per litre on petrol
• ₹10 per litre on diesel

However, officials indicated there is now limited room for further tax cuts.

The government also continues to bear a large subsidy burden on domestic LPG cylinders.

Inflation Concerns Delay Immediate Hike

Authorities are reportedly cautious about implementing sharp fuel price hikes immediately because of their potential impact on inflation.

India’s retail inflation currently stands near 3.4%, and a sudden rise in fuel prices could affect:

• Transportation costs
• Food prices
• Logistics expenses
• Household budgets

Former Bharat Petroleum chairman G Krishnakumar said oil companies need financially healthy balance sheets to continue investing during India’s long-term energy transition.

He suggested smaller daily price increases could help reduce the burden on consumers while stabilising company finances.

Former Hindustan Petroleum chief S K Surana also warned that prolonged under-recoveries are unsustainable for oil firms.

Renewable Energy Transition Still Incomplete

Experts noted that despite India’s growing renewable energy investments, the country remains heavily dependent on fossil fuels.

Analysts believe balancing:

• Consumer affordability
• Inflation control
• Energy security
• Oil company profitability

will remain one of the government’s biggest economic challenges in the coming months.

Bottom line

India’s fuel pricing pressure is intensifying as state-run oil companies absorb huge losses amid soaring crude oil prices. While the government has so far shielded consumers from major hikes, officials are increasingly signalling that the current arrangement may not remain sustainable for much longer.

What to watch next

• Possible petrol and diesel price revisions
• Global crude oil movement above $100 levels
• Government decision on fuel subsidies and excise duty
• Impact on inflation and household expenses
• Oil company financial performance in coming quarters