India has raised petrol and diesel prices for the first time in four years by 3 rupees ($0.03) per litre, or more than 3%, according to retailers in Delhi on Friday, to recoup some of the losses incurred due to higher global crude oil prices.
Global oil prices spiked to more than $120 a barrel following the closure and severe disruption of the Strait of Hormuz by the war that started with U.S.-Israeli attacks on Iran, before pulling back to around $100 to $105.
India is one of the last major economies to raise retail fuel prices. Diesel in Delhi will cost 90.67 rupees a litre and petrol 97.77 rupees, reflecting increases of 3.4% and 3.2%, respectively, from 87.67 rupees and 94.77 rupees a litre.
The direct impact of the fuel price hike would be muted at about 15 basis points on consumer price inflation, although the indirect impact will be larger, said Madhavi Arora, chief economist at Mumbai-based Emkay Financial Services.
State-run Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp, which together control more than 90% of India’s 103,000 fuel stations, tend to fix diesel and petrol prices in tandem.
On Sunday, Prime Minister Narendra Modi urged a spate of measures including fuel conservation, work-from-home practices, and limits on travel and imports, as surging global energy prices put pressure on the country’s foreign exchange reserves.
Analysts and opposition parties said state retailers had delayed raising prices during key state elections. The polls ended this month, with Modi’s BJP winning two of four states and expanding its influence.
Oil ministry official Sujata Sharma in April said retailers lose about 100 rupees per litre on diesel and about 20 rupees on petrol.
In late March, Russia-backed Indian private refiner Nayara Energy had raised pump prices to mitigate some of its revenue losses from retail sales.
Source: Reuters