No immediate petrol, diesel price hike despite crude climbing to $80: Report

For India, which imports 88 per cent of its requirement of crude oil, which is turned into fuels like petrol and diesel at refineries, higher global prices translate into a larger import bill and potential inflationary pressures.

• Crude oil prices jump 9% after US-Iran strikes
• India's retail fuel prices to remain steady despite crude spike
• Government monitoring supply, aims to ensure fuel availability

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International crude oil prices surged nearly 9% following US and Israeli military strikes on Iran and retaliatory attacks by Tehran, raising concerns over fuel costs and supply disruptions. However, retail petrol and diesel prices in India are unlikely to be increased in the immediate term, sources said.

Brent crude, the global benchmark, climbed close to $80 per barrel, while US-traded crude rose 8.6% to $72.79, up from around $67 on Friday.

For India, the world’s third-largest oil importer, the spike carries significant implications. The country imports about 88 per cent of its crude oil requirement, which is refined into fuels such as petrol and diesel. Higher global prices typically mean a larger import bill and potential inflationary pressure on the economy.

Despite the rise, retail prices are expected to remain steady for now. Fuel prices have been frozen since April 2022, with state-run oil marketing companies absorbing losses during high crude phases and building margins when prices soften.

Sources said the government continues to follow a calibrated policy, allowing companies to build margins when international prices are low and cushioning consumers when rates rise. Unless there is a sharp and sustained spike in crude, prices at the pump are unlikely to be revised immediately.

"They (oil companies) have enough cushion to sustain this kind of prices spike," a source with direct knowledge of the matter said. "We have seen prices rise to USD 119 per barrel in June 2022 in the aftermath of the Russia's invasion of Ukraine. That year they had nominal profits but in FY24 they posted record Rs 81,000 crore profit."

The three major state-run retailers — Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL), have already posted Rs 23,743 crore profit in the December quarter alone this financial year.

The current geopolitical flare-up has heightened concerns around the Strait of Hormuz, a critical chokepoint through which nearly half of India’s oil imports pass. Following the attacks, Iran warned shipping away from the strait, and insurers reportedly withdrew coverage, effectively halting tanker movements.

"This (closure of Strait of Hormuz) raises the risk of further disruptions in the Red Sea and across the wider Middle East," Moody's Analytics said.

Amid the escalating tensions in West Asia, Union Petroleum and Natural Gas Minister Hardeep Singh Puri on Monday reviewed the supply situation of crude oil, LPG and other petroleum products with senior officials from the ministry and public sector undertakings.

"We are continuously monitoring the evolving situation and all steps will be taken in order to ensure availability and affordability of major petroleum products in the country," the ministry said in a post on X.

Parallelly, the Department of Commerce under the Ministry of Commerce and Industry held a high-level stakeholder consultation to assess the potential impact of the West Asia crisis on India’s export-import cargo flows. The meeting, chaired by Special Secretary Suchindra Misra and Director General of Foreign Trade Lav Agarwal, included representatives from logistics operators, shipping lines, customs authorities, financial institutions and export promotion bodies.

According to the ministry, stakeholders discussed routing changes, vessel scheduling adjustments, freight and insurance costs, container availability and the implications for time-sensitive exports.

"The discussions covered the need to maintain predictability in cargo movement, minimise avoidable delays, and ensure seamless documentation and payment processes for exporters and importers," the Commerce Ministry said in a statement.

With assembly elections approaching in key states, the government appears keen to shield consumers from immediate price shocks, even as global energy markets remain volatile.