For 49 months, Indian motorists had something rare in a volatile world: stable fuel prices. That run ended today.
State-owned oil companies Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum, which together control over 90 per cent of the country’s fuel stations, raised petrol and diesel prices by Rs 3 per litre each on May 15, marking the first such hike in more than four years.
In Delhi, petrol moved from Rs 94.77 to Rs 97.77 per litre, while diesel rose from Rs 87.67 to Rs 90.67. Across other metros, petrol is now priced at Rs 108.74 in Kolkata, Rs 106.68 in Mumbai, and Rs 103.67 in Chennai.
The immediate public response was telling. Even before the official announcement, reports of a possible steep hike had sent consumers rushing to petrol stations across the country. Long queues formed, “No Fuel” boards went up at several pumps, and many opted for full-tank refills, fearing prices could climb further, with speculation circulating that rates might rise by anywhere between Rs 5 and Rs 20 per litre.
That anxiety is not without basis.
A crisis long in the making
The hike was not a surprise to anyone watching the numbers. India’s crude oil import basket averaged $69 per barrel in February 2026, before the West Asia conflict escalated. In the weeks that followed, it averaged $113 to $114 per barrel, a surge of over 50 per cent. Officials from the oil ministry had reportedly stated that retailers were losing Rs 100 per litre on diesel and Rs 20 per litre on petrol at prevailing prices. The three PSU oil companies absorbed these losses for close to 11 weeks before the hike became financially unavoidable.
And yet, even the Rs 3 revision barely scratches the surface. Industry sources say the hike is only one-tenth of the correction actually needed to account for the full surge in global crude since the West Asia war began.
ICRA’s Senior Vice President Prashant Vasisht put it plainly: at crude prices of $105 to $110 per barrel, oil marketing companies are still incurring a loss of approximately Rs 500 crore daily on the sale of auto fuels and domestic LPG, even after factoring in the price hike. Another revision, he said, would be needed if elevated crude prices persist.
Pump politics
The timing of the hike has drawn sharp attention. It came exactly 16 days after assembly elections concluded in Assam, Kerala, Tamil Nadu, and West Bengal. Fuel prices had been held steady through the entire polling period despite soaring international crude rates. Monetary Policy Committee member Ram Singh had explicitly forecast post-election fuel price hikes even before the polls ended.
The opposition wasted no time. Congress leader Jairam Ramesh called the hike inevitable but politically timed, warning it “is bound to lead to further inflation that is now projected to be close to 6 per cent for this financial year” and adding that growth estimates would be lowered considerably.
Punjab Congress president Amrinder Singh Raja Warring was more pointed, saying: “Farmers will pay more. Truck operators will pay more. Middle-class families will pay more. Every essential item will become expensive again. The truth is simple: BJP doesn’t reduce inflation, it manages headlines.”
Shiromani Akali Dal president Sukhbir Singh Badal called it a crippling blow to the common man, already battling inflation and rising living costs.
The road ahead
Industry sources suggest the price hike is calibrated enough to partially ease margin pressure on oil companies without creating a major inflationary shock. However, studies show that fuel price shocks in India carry significant second-round inflationary effects through input costs in agriculture and manufacturing, with transport cost pass-through typically completing within two to three months of the initial price change.
The Rs 3 hike, in that context, looks less like a resolution and more like an opening move. With global crude showing no signs of cooling and OMC losses still mounting, the question is not whether another hike is coming. It is when.
