OMCs raise petrol, diesel prices by up to ₹0.90 per litre; second hike within a week

Petrol and diesel prices were increased again on Tuesday, marking the second hike within a week, amid mounting pressure from elevated crude oil prices in the international market and rising under-recoveries in the sector. The latest revision raised fuel rates by up to ₹0.90 per litre across major cities, with petrol prices going up by ₹0.87 per litre and diesel prices rising by ₹0.91 per litre.

In the national capital, petrol prices climbed to ₹98.64 per litre from ₹97.77, while diesel rates increased to ₹91.58 per litre from ₹90.67.

In Mumbai, petrol prices rose by ₹0.91 to ₹107.59 per litre, while diesel prices increased by ₹0.94 to ₹94.08 per litre.

Kolkata witnessed the sharpest increase in petrol prices among the metros, with rates going up by ₹0.96 to ₹109.70 per litre. Diesel prices in the city were raised by ₹0.94 to ₹96.07 per litre.

In Chennai, petrol prices advanced by ₹0.82 to ₹104.49 per litre, while diesel prices increased by ₹0.86 to ₹96.11 per litre.

Last Friday, state-run oil marketing companies (OMCs) had increased fuel prices by ₹3 per litre, marking the first hike in nearly four years. Petrol and diesel prices had largely remained unchanged since April 2022, barring a one-time cut of ₹2 per litre in March 2024 ahead of the Lok Sabha elections.

The move reflects the increasing financial strain on OMCs as global crude prices remain elevated amid geopolitical tensions in West Asia and supply disruptions around the Strait of Hormuz. In overnight trade, global benchmark Brent crude eased from $112 per barrel to $109 after US President Donald Trump said he was holding off a military strike on Iran that had reportedly been planned for Tuesday, following requests from Gulf states.

Even after the latest revision, the increase remains significantly lower than what several market analysts had anticipated. Brokerages had expected a sharper first round of hikes to partially offset the losses being incurred by fuel retailers.

According to a recent report by Systematix Institutional Research, the fuel price hike, following Prime Minister Narendra Modi’s austerity appeal, is just the beginning of a broader correction cycle. The report noted that the latest hike offsets only 7-8% of cumulative under-recoveries from nearly three months of unchanged fuel prices, with total losses estimated at ₹1.7-1.8 lakh crore. It expects several more rounds of fuel price hikes to recover past losses, especially if crude oil prices remain above $100 per barrel.

The latest fuel price hike is expected to further strain household budgets and increase cost pressures for businesses already dealing with elevated transportation and logistics expenses amid the prolonged conflict in West Asia.

“The recent hike in petrol and diesel prices is putting significant pressure on transportation and distribution costs, which are critical for the FMCG sector, given the reliance on supply chain efficiency. Higher diesel prices directly translate into increased logistics and last-mile delivery expenses, leading to inflationary pressures that can impact overall input costs and consumer demand patterns,” said Salloni Ghodawat, CEO, Ghodawat Consumer, the FMCG arm of Sanjay Ghodawat Group.