In response to rising global crude oil prices due to tensions in the Middle East, the Indian government has reduced excise duty on petrol to support major oil companies like HPCL, BPCL, and IOC. The excise duty on petrol has been cut to INR 3 per litre from INR 13, while diesel has been fully exempted from excise duty, down from INR 10 per litre, according to a notification issued by the Ministry of Finance on March 26.
This move comes after escalating geopolitical tensions, including military actions by United States and Israel against Iran on February 28, which triggered sharp volatility in global oil markets. Despite nearly a 50% increase in international crude oil prices since then, retail fuel prices in India have remained largely unchanged, putting significant financial strain on fuel retailers.
According to a report by ICRA, if crude oil prices average between $100–105 per barrel, oil marketing companies could face losses of around INR 11 per litre on petrol and INR 14 per litre on diesel. Earlier this month, global oil prices had surged to $119 per barrel before easing to around $100.
In New Delhi, petrol is currently priced at INR 94.77 per litre, while diesel costs INR 87.67 per litre. India imports about 88% of its crude oil needs and nearly half of its natural gas, making it highly sensitive to global price fluctuations.
Private fuel retailer Nayara Energy, which operates nearly 7,000 petrol pumps, has partially passed on the increased costs to consumers. Petrol prices at its outlets have risen to INR 100.71 per litre and diesel to INR 91.31 per litre. Meanwhile, Jio-bp, a joint venture between Reliance Industries and BP, has reported significant losses on fuel sales but has not yet increased prices.
Government-owned fuel retailers, which control around 90% of the market, have so far kept prices frozen, absorbing the impact of rising global costs.
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