India's state-owned oil refineries have raised fuel prices for the first time in four years as global crude prices surged due to the Iran war.
The move shows New Delhi is starting to give room to market prices after financial pressures mounted on domestic refiners.
Petrol and diesel prices rose more than 3% each, even as Brent crude prices have surged nearly 50% since the conflict in the Middle East erupted. In New Delhi, diesel prices rose to 90.67 rupees per liter while petrol hit 97.77 rupees per liter, the highest since May 2022.
As the world's third-largest oil importer, India relies heavily on energy supplies from the Persian Gulf. In most crisis situations, the Indian government usually tries to protect consumers from rising fuel costs to control inflationary pressures and the cost of living.
However, mounting fiscal pressures are now forcing the government to balance economic stability with the financial burden on oil refiners.
Major companies such as Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited are reported to be losing around 10 billion rupees a day on fuel sales.
Analysts also expect fuel retailers to still face a gap of between 15 and 20 rupees on every litre of fuel sold. The situation continues to put pressure on India's energy sector, which is currently facing rising crude oil import costs.
The negative sentiment also affected the stock market as shares of major Indian refiners fell in early trade in Mumbai. Hindustan Petroleum shares fell almost 3%, while Bharat Petroleum and Indian Oil were also trading lower.
At private petrol stations, fuel prices were reported to be much higher with petrol selling for over 110 rupees per litre and diesel for almost 120 rupees per litre. The price difference shows the real pressure of the global energy market on India's domestic fuel costs.
State-owned fuel retailers control almost 90% of the petrol station market in India and have previously maintained fuel prices since March 2024 despite continued increases in global oil prices.
Diesel remains the most important fuel in the country, accounting for around 40% of total fuel sales.
