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Informist, Friday, May 1, 2026

NEW DELHI - While prices of petrol and diesel have so far not been hiked in the wake of surge in oil prices due to the war in West Asia, a senior government official Friday said that the possibility of it cannot be ruled out. "Oil prices have gone up, how much the oil companies will continue absorbing, how much will be passed on to retail consumers will have to be seen," the official said. "It will all depend on the duration of the West Asia conflict," the official added.

This comes even as the government has repeatedly said proposals are currently not under consideration to hike petrol and diesel prices. 

According to the official, oil prices have stayed high for a prolonged period than earlier envisaged. So far, the government and the oil marketing companies have absorbed the hit from the higher oil prices without passing on the price pressure to retail customers. "The issue is how long can it be sustained," the official said. 

The war in West Asia, which began on Feb. 28, has increased India's exposure to energy and price shocks, given New Delhi's dependence on the region for crude oil and liquefied petroleum gas supplies. Crude oil prices have soared since the war broke out, rising to a four-year high of $126 per barrel on Thursday from sub $73 level before the war.   

The government has taken a slew of measures to mitigate the impact of the war in West Asia, including cutting excise duty on diesel and petrol by INR 10 per litre to help oil marketing companies absorb the rise in crude oil prices. According to the official, if the excise duty cut stays in place for a year, it will cost the exchequer around INR 1.70 trillion which will be substantial hit to its revenues. "So there are many aspects to how long the petrol, diesel prices can be capped," the official said. "It's a free market, so oil companies will also have a say," the official added. 

If retail prices go up, the official said, inflation could also inch up. However, he said, it is "difficult" as of now to quantify by how much it can go up. The Reserve Bank of India has projected headline inflation to average 4.6% in 2026-27 (Apr-Mar) and after more than a year of risks to inflation being "evenly balanced", said that risks to inflation forecasts are on the upside.

As per latest data, CPI inflation rose to a one-year high of 3.4% in March, driven by higher food and utilities inflation, although higher energy prices and choked supplies had a limited impact during the month.  End

Reported by Priyasmit Dutta and Sagar Sen

Edited by Akul Nishant Akhoury

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