Centre Rules Out Fuel Price Hike; OMCs Absorb Rs 100/Litre Loss on Diesel Amid Global Crude Surge

New Delhi: In a major relief to Indian consumers grappling with global economic uncertainty, the Union Government has clarified that there is no immediate plan to raise the retail prices of petrol and diesel. This announcement comes despite state-run Oil Marketing Companies (OMCs) incurring massive "under-recoveries" due to a sharp spike in international crude oil prices.

The Under-Recovery Crisis The Ministry of Petroleum and Natural Gas has officially confirmed that state-run retailers are currently facing a significant gap between domestic retail rates and import-linked pricing. According to Joint Secretary Sujata Sharma, the notional revenue losses for these companies have reached historic levels:

• Rs 20 per litre for petrol
• Rs 100 per litre for diesel

These staggering figures reflect the widening disparity between frozen domestic retail prices and the rising cost of imported crude oil. The government clarified that these "under-recoveries" represent notional revenue losses compared to prevailing market prices rather than immediate cash losses, though they significantly impact the financial health of OMCs.

Dismissing Hike Rumors The government’s statement aims to quash widespread speculation and social media reports suggesting a potential price hike of Rs 25–28 per litre once the ongoing state assembly elections conclude on April 29. The Ministry labeled these reports as "mischievous and misleading," asserting that they were designed to create unnecessary fear and panic among the public. "There is no such proposal under consideration," the Ministry stated in an official clarification.

Global Context: Crude at $113+ India’s energy security is currently being tested by extreme volatility in the international market, largely fueled by the intensifying conflict in West Asia. Several factors are contributing to the current pricing pressure:

• Skyrocketing Crude Prices: Brent crude, which averaged around $70 per barrel last year, has surged to an average of over $113 per barrel this month, occasionally breaching the $119 mark following supply concerns.
• Geopolitical Supply Risks: The ongoing US-Israel-Iran conflict and the subsequent blockade of the Strait of Hormuz have severely restricted oil flows. This has had a direct impact on India, which relies on imports for approximately 88% of its crude oil requirements.
• Government Policy Buffers: To mitigate the impact on the common man, the Centre recently reduced excise duties by Rs 10 per litre. Additionally, the government has maintained a tax on fuel exports to ensure that private refiners prioritize domestic supply over international sales.

Market Divergence and Inflationary Concerns While state-owned giants like IOCL, BPCL, and HPCL have maintained a price freeze since April 2022 to ensure economic stability, private retailers have begun to react differently. Companies such as Nayara and Shell have already increased their pump prices to align with the rising cost of imports.

The Reserve Bank of India (RBI) has recently warned of the "second-round effects" of these global price shocks on domestic inflation. By directing OMCs to absorb the current losses, the government is attempting to anchor inflationary expectations and protect the household budgets of millions of Indians during a period of high global instability.