Petrol, Diesel Prices Hiked Third Time in May Amid Crude Oil Surge

Petrol and diesel prices in India have been increased for the third time this month, reflecting mounting pressure from global crude oil markets and geopolitical instability in the Middle East.

Petrol and Diesel Prices See Third Hike in May

Fuel prices across India have witnessed yet another upward revision, marking the third hike in May. Petrol prices have increased by 87 paise per litre, while diesel has become costlier by 91 paise per litre. This follows a recent hike of around 90 paise per litre earlier in the week, and a significant ₹3 per litre increase announced on May 16.

The consecutive price hikes signal a shift after a prolonged period of relative stability in domestic fuel rates. For months, consumers experienced little to no change in petrol and diesel prices despite fluctuations in international crude oil markets. However, the recent surge indicates that oil marketing companies have begun passing on the rising costs to end users.

Latest Fuel Prices in Major Metro Cities

As per the latest revision, fuel prices in key metro cities have been updated as follows:

Petrol Prices (per litre)

• Delhi: ₹99.51 (+0.87)
• Kolkata: ₹110.64 (+0.94)
• Mumbai: ₹108.49 (+0.90)
• Chennai: ₹105.31 (+0.82)

Diesel Prices (per litre)

• Delhi: ₹92.49 (+0.91)
• Kolkata: ₹97.02 (+0.95)
• Mumbai: ₹95.02 (+0.94)
• Chennai: ₹96.98 (+0.87)

The variation in prices across cities is primarily due to differences in state taxes, transportation costs, and local levies.

Global Crude Oil Prices Driving Domestic Fuel Hikes

The latest increase in fuel prices comes at a time when global crude oil markets remain highly volatile. Rising geopolitical tensions in the Middle East, particularly involving Iran, have significantly impacted oil supply expectations and investor sentiment.

Brent crude futures recently crossed USD 104 per barrel, while US West Texas Intermediate (WTI) crude hovered around USD 97 per barrel. Although both benchmarks showed signs of weekly decline, the overall market continues to experience sharp fluctuations due to uncertainty surrounding US-Iran negotiations and regional conflicts.

At one point, crude oil prices surged close to USD 111 per barrel, intensifying concerns over supply disruptions. These global developments have placed additional financial strain on oil-importing countries like India.

Oil Marketing Companies Begin Passing On Costs

State-run oil marketing companies (OMCs) had previously absorbed rising costs to maintain price stability for consumers. According to government estimates, these companies were incurring losses of nearly ₹1,000 crore per month during this period.

However, with crude oil prices remaining elevated and supply risks persisting, OMCs have started transferring a portion of the financial burden to consumers through gradual price increases. The recent revisions reflect an effort to balance operational sustainability with market realities.

Impact of Middle East Crisis on Fuel Prices

The ongoing geopolitical tensions in the Middle East have emerged as a key factor influencing global oil markets. The region accounts for a significant share of the world’s oil production, making it highly sensitive to political instability.

Concerns over potential disruptions in oil supply chains, coupled with uncertain diplomatic outcomes, have created volatility in crude prices. As India relies heavily on oil imports, any fluctuation in global crude rates directly impacts domestic fuel pricing.

The Iran-related tensions, in particular, have raised fears of supply constraints, leading to speculative trading and price spikes in international markets.

Government’s Perspective on Fuel Price Stability

Despite the recent hikes, the government has emphasized its efforts to maintain stability in fuel prices over the past few years. Union Minister for Petroleum and Natural Gas, Hardeep Singh Puri, highlighted that India managed to ensure uninterrupted fuel supply even during periods of global energy disruptions.

Speaking at a business summit, the minister noted that petrol, diesel, and LPG availability remained seamless across the country, with no reports of shortages. He also pointed out that domestic LPG production has been significantly increased to meet rising demand.

According to the government, strong policy coordination and efficient supply chain management have played a crucial role in cushioning the impact of global oil shocks.

Balancing Consumer Relief and Economic Pressures

The recent fuel price hikes highlight the delicate balance between protecting consumers and maintaining the financial health of oil companies. While prolonged price stability benefits consumers, it can lead to mounting losses for OMCs when global crude prices rise.

Gradual price adjustments are often seen as a more sustainable approach, allowing companies to recover costs without causing sudden shocks to consumers. However, frequent hikes can still impact household budgets and increase transportation costs, potentially contributing to inflation.

What Lies Ahead for Fuel Prices?

The future trajectory of petrol and diesel prices in India will largely depend on global crude oil trends and geopolitical developments. If tensions in the Middle East ease and supply stabilizes, there could be some relief in fuel prices.

On the other hand, prolonged uncertainty or escalation in conflicts may continue to exert upward pressure on global oil markets, leading to further domestic price revisions.

Consumers and policymakers alike will be closely monitoring international developments, as they remain a key determinant of fuel pricing in the country.