Fuel prices rise again: Petrol and diesel up around 90 paise in second hike in a week

India's oil marketing companies (OMCs) increased fuel prices for the second time in a week on Tuesday, raising petrol and diesel prices by about 90 paise per litre on Tuesday. This follows a ₹3 per litre hike implemented on 15 May.

According to data from Indian Oil Corp Ltd, petrol in the national capital rose 87 paise to ₹98.64 per litre, while diesel climbed 91 paise to ₹91.58. Other major metros saw similar increases:

Crude prices eased somewhat on Tuesday after US president Donald Trump on Monday announced the US would defer a planned military strike on Iran.

Around 5.40 pm IST, the July contract of Brent crude was trading at $110.96 a barrel on the Intercontinental Exchange, down 1.01% from its previous close, while the June contract of West Texas Intermediate fell 0.46% to $103.87 a barrel on the NYMEX. Both trimmed losses after falling about 2% in the morning session (Indian time).

On Monday, Trump said he had shelved plans for a "scheduled attack on Iran" following requests from the leaders of Qatar, Saudi Arabia and the United Arab Emirates. An extension of the US sanctions waiver for the import of Russian oil also eased supply concerns. However, concerns persist over the prospects of a peace deal between the US and Iran, keeping oil prices elevated.

But while India's fuel price hikes will help oil marketing companies recover revenue losses, the resulting inflationary pressure is likely to weigh on economic growth estimates.

Pronob Sen, former chief statistician of India, said, “These price hikes of petroleum products will obviously lead to an increase in inflation as it would have effects across sectors.”

“Price hikes are not just because of the financial pressure. Along with the financial issue, there is also an availability issue. If you want people to consume less, one way is to raise prices or resort to rationing. We have seen some rationing in the case of LPG,” he added.

Data released by the department for promotion of industry and internal trade (DPIIT) last week showed that India's wholesale inflation surged to a 42-month high of 8.3% in April from 3.88% in March, driven by a sharp rise in the prices of fuel, crude petroleum and manufactured products.

Fuel and power inflation jumped to 24.71% in April from 1.05% in March, emerging as the biggest contributor to headline wholesale inflation.

Retail inflation for April came in at a 13-month high of 3.48% as prices of food and beverages, clothing, housing and utilities hardened amid rising energy costs. Higher petrol and diesel prices are expected to increase it further.

India imports about 90% of its oil, and a $1-per-barrel rise in oil prices for a year increases the country’s annual import bill by about ₹18,000 crore, according to latest estimates by Bank of Baroda. India's oil import bill was $123.11 billion in FY26, according to provisional data from the petroleum planning & analysis cell.