New Delhi: Petrol and diesel prices have been increased again across major Indian cities, reviving concerns that oil marketing companies may return to the gradual “small but frequent hike” strategy seen in 2022.
State-run fuel retailers, including Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited, have raised prices for the second time in five days. Petrol prices have gone up by around 90 paise per litre, while diesel has also seen a similar increase.
In Delhi, petrol now costs ₹98.64 per litre, up by 87 paise, while diesel has risen by 91 paise to ₹91.58 per litre. In Mumbai, petrol is priced at ₹107.59 per litre and diesel at ₹94.08 per litre. Kolkata and Chennai have also witnessed comparable increases.
The latest revision comes shortly after a ₹3 per litre hike announced last week, indicating that fuel prices may continue to move upward in phases rather than through a one-time sharp increase.
The current trend has drawn comparisons with the period following the Russia-Ukraine war in 2022, when fuel prices were revised almost daily over a span of two weeks.
During that period, petrol and diesel prices were increased 13 times in around 15 days. Instead of a steep one-time hike, oil companies opted for smaller daily increases, mostly around 80 paise per litre. This approach helped distribute the impact over time and avoid sudden public backlash.
Analysts believe that a similar pricing pattern could emerge again if global crude oil prices remain elevated and supply concerns persist.
One of the key reasons behind the recent increase is the sustained rise in global crude oil prices. International benchmarks have remained above $100 per barrel despite some fluctuations.
Geopolitical tensions in West Asia and concerns over disruptions in the Strait of Hormuz have added to supply uncertainties. The Strait of Hormuz is a crucial transit point for global oil shipments, and any disruption there can significantly affect prices worldwide.
India, which imports a large portion of its crude oil requirements, is particularly vulnerable to such global developments. As a result, domestic fuel prices tend to reflect international trends with a lag.
Industry estimates suggest that state-run oil marketing companies were incurring losses of around ₹1,600 crore to ₹1,700 crore per day before the recent price hikes.
Even after the ₹3 per litre increase last week, experts believe the losses may not have been fully offset. Analysts indicate that a ₹1 per litre increase in fuel prices can improve the combined annual EBITDA of these companies by approximately ₹15,000 crore to ₹16,000 crore.
However, if crude oil prices remain elevated for an extended period, companies may still require a cumulative increase of nearly ₹10 per litre to recover their losses completely.
Despite fuel prices being deregulated, oil companies often avoid sharp, one-time increases during periods of volatility. Instead, they prefer gradual revisions.
Smaller, frequent hikes help reduce the immediate burden on consumers and limit public backlash. They also allow companies to adjust prices in line with changing global conditions without causing sudden disruptions.
This strategy was effectively used in 2022 and is now being seen as a likely option once again.
Experts believe that if global crude oil prices remain above $100 per barrel and geopolitical tensions continue, fuel prices in India may see further incremental increases over the next three to four months.
While each individual hike may appear small, the cumulative impact could be significant over time. Consumers are therefore advised to keep track of daily price revisions and plan their expenses accordingly.
The recent rise in petrol and diesel prices suggests that the current phase of fuel price adjustments may be far from over. With global crude oil markets remaining volatile and oil companies under financial strain, a return to the 2022-style gradual hike strategy appears increasingly likely.
For consumers, this means that while sharp price shocks may be avoided, the steady upward movement in fuel costs could continue in the coming weeks, adding to overall household expenses.
