A potential rise in fuel prices is being considered due to the sustained high global crude oil prices and the strain on India’s oil companies, according to Pranjul Bhandari, Chief India Economist at HSBC. Bhandari highlighted that India’s crude oil import cost has been averaging around $110 per barrel, significantly impacting oil marketing companies. She mentioned that while the government has reduced excise duty on oil to alleviate some of the burden, consumers may also need to share part of the cost, with recent retail price hikes of seven and a half rupees per litre. Bhandari suggested that further price increases, possibly by 10 to 12 rupees per litre, could be necessary to distribute the impact of global price shocks more evenly between the government and consumers.
At the same time, Bhandari cautioned that if global oil prices remain high, additional retail price adjustments may be inevitable in the short term. She emphasized that if the current crisis persists and India’s oil import bill remains elevated, further price hikes could be on the horizon. These remarks come amidst ongoing volatility in global crude markets, which continue to exert pressure on energy import expenses. The government recently acknowledged the financial strain faced by oil marketing companies in India, with daily under-recoveries, including losses on liquefied petroleum gas (LPG) sales, estimated at Rs 600–700 crore. Praveen Khanooja, Additional Secretary in the Ministry of Petroleum and Natural Gas, highlighted that the losses are primarily driven by significant disparities between retail prices and international fuel costs.
