The Union ministry of petroleum and natural gas (MoPNG) on Thursday firmly denied reports claiming petrol and diesel prices in India could soon rise by ₹25-₹28/litre, stating that no such proposal is under consideration by the government.
The clarification came after media reports citing a note from Kotak Institutional Equities suggested that domestic fuel prices may need to be raised after the ongoing state elections if global crude oil prices remain elevated and tensions in West Asia continue. According to the brokerage, if India’s crude basket stays near US$120/barrel, a retail fuel price increase of ₹25-₹28/litre could be economically justified to offset refiners' losses.
Responding to the speculation, the ministry described the reports as mischievous and misleading, saying they were creating unnecessary concern among citizens. It added that India remains among the few countries where petrol and diesel prices have not been increased in the last four years despite volatility in international oil markets.
Fuel pricing in India is influenced by a combination of international crude oil prices, refining margins, exchange rate movements, taxes, freight costs and dealer commissions. Since India imports a large share of its crude oil requirements, any sharp increase in global prices can raise the cost of domestic fuels. However, State-owned OMCs often balance commercial pressures with broader economic and political considerations before passing on higher costs to consumers. This has led to long periods of price stability in recent years, even during episodes of global volatility.
Petrol and diesel prices also carry significant economic importance because transportation costs affect food inflation, manufacturing expenses and household budgets. Any major increase in pump prices can have a cascading impact across sectors such as logistics, agriculture and consumer goods. As a result, fuel prices are closely watched by markets, policy-makers and consumers alike.
Analysts say future pricing decisions will depend largely on crude oil trends, currency stability and the government’s willingness to absorb temporary shocks through tax adjustments or support to oil companies.
Kotak’s report argued that Indian refiners are currently absorbing significant under-recoveries because domestic pump prices have remained unchanged even as global crude prices have risen sharply. It estimated the burden on refiners at roughly ₹270bn (billion) per month.
While analysts see pressure building on fuel pricing if crude remains high, the government’s latest statement indicates there is no immediate plan to pass those costs on to consumers. For now, petrol and diesel prices continue to remain stable across major Indian cities.
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