The Lede
International oil prices remain at supernormal levels due to the West Asia crisis and disruption in the Strait of Hormuz, pushing Indian oil marketing companies (OMCs) into heavy losses on petrol, diesel, and LPG [1][2]. A senior government official told The Indian Express that a price hike is inevitable, but the Ministry of Petroleum and Natural Gas (MoPNG) has repeatedly denied any such proposal [4][5].
The Price Freeze and Its Cost
Petrol and diesel prices in India have been frozen since April 2022 [3][14]. In Delhi, petrol is priced at Rs 94.77 per litre and diesel at Rs 87.67 per litre [6][7]. Domestic LPG costs Rs 913 per 14.2-kg cylinder, last revised on March 7 [8][11]. Meanwhile, the Indian crude oil basket averaged over $113 per barrel in April, up from $70 per barrel last year [15][16]. This gap is bleeding OMCs. Petroleum Ministry Joint Secretary Sujata Sharma said OMCs were incurring losses of around Rs 20 per litre on petrol and Rs 100 per litre on diesel [9]. On LPG, under-recoveries were about Rs 380 per cylinder [12]. Fuel retailers are also losing on jet fuel for domestic flights [13].
Official Signals and Denials
A senior government official told The Indian Express that a hike in petrol, diesel, and domestic LPG prices is inevitable and only a matter of time [5]. However, the MoPNG assured consumers throughout March and April that there was no proposal to hike fuel prices [4]. On April 1, the ministry reiterated that OMCs were incurring under-recoveries but denied any imminent hike [12][18]. A brokerage note by Kotak Institutional Equities suggested a potential hike of Rs 25-28 per litre after Assembly elections [17].
The Global Context
The West Asia crisis and the halt of vessel movements through the Strait of Hormuz have disrupted global oil supplies [19]. One-fifth of global oil and natural gas usually transits through the strait [20]. India depends heavily on oil and gas imports to meet its energy needs [21]. While India has been comfortable with crude, petrol, and diesel availability, LPG supplies have been notably hit, forcing the government to ration commercial and industrial LPG sales to prioritize household supplies [22][23].
What to Watch Next
The government faces a delicate balancing act: protect consumers from price shocks ahead of elections while ensuring OMCs remain solvent. If crude stays above $100, a post-election hike seems all but certain. The MoPNG's next move—and the timing of any revision—will be closely watched.