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Informist, Wednesday, May 27, 2026

 

NEW DELHI – The Centre has asked states to take strict action against bulk consumers of auto fuels taking supply meant for retail consumers. There is no scarcity of any petroleum product in the country, but a pattern of arbitrage is making it appear there are dry-outs in a few pockets, according to the Ministry of Petroleum and Natural Gas. This is primarily due to bulk consumers shifting to retail fuel pumps, especially those operated by state-owned companies, leading to a supply-demand mismatch.

 

The Centre has also asked states to form special squads to check black marketing, unauthorised stocking, and diversion of petroleum products. The government is constantly reviewing the situation. Petroleum Secretary Neeraj Mittal reviewed the situation with the chief secretaries of the states and Union territories Wednesday, the ministry said. "The picture that emerges from the field is consistent. There is no scarcity of any petroleum product. There is, in pockets, a pattern of arbitrage that is creating the appearance of one."

 

India is facing its worst energy crisis in decades due to the war in West Asia, with crude oil prices rising nearly 60% following the closure of the Strait of Hormuz in early March. Nearly 50% of India's crude imports pass through this crucial waterway. While the government and oil marketing companies were ensuring an uninterrupted supply of fuel, dry-outs have been reported in some areas since Thursday due to a rise in demand for petrol and diesel by 20-30%, with commercial users shifting to retail pumps.

 

"Industrial consumers who divert their purchases from the industrial channel to the retail pump capture this cushion at the cost of the ordinary citizen. They also concentrate demand at the pump in a way that produces local shortages where none would otherwise exist," the ministry said.

While petrol and diesel prices for retail consumers are regulated, prices for commercial sale are linked to international crude oil prices. The prices of commercial petrol and diesel, which are usually reviewed every fortnight, have been increased accordingly. 

 

State-owned oil companies have hiked retail fuel prices four times in the last two weeks, taking the total increase to INR 7.35 per litre for petrol and INR 7.53 per litre for diesel. Even after the price increases, oil marketing companies are losing about INR 5.5 billion per day, down from around INR 10 billion per day earlier, the ministry said. 

This price differential between commercial and retail fuel has led to a chunk of bulk consumers switching to retail pumps to take advantage of the lower fuel price. The ministry said private oil marketing companies are experiencing a decline of approximately 38% in diesel offtake in May across both retail outlets and bulk customers due to their higher prices. This volume is shifting entirely to PSU oil marketing retail outlets. PSU bulk customer volumes have declined by approximately 29%. End

 

 

Reported by Priyasmita Dutta

Edited by Saji George Titus

 

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