Fuel Prices Surge Amid West Asia Conflict: Which Countries Are Most Affected and Why India Remains an Exception

Global Petrol Price Surge: 95 Countries Affected

The ongoing West Asia war has escalated tensions, threatening energy supply and driving up crude prices. As a result, retail fuel prices have increased globally, with 95 countries recording price hikes between February 23 and March 11.

Global Petrol Price Increases

• In the United States, petrol prices have risen by 20%, from $2.94 per gallon in February to $3.58, with several states crossing $4 and California breaching $5.
• Globally, petrol prices have surged, with some markets experiencing spikes of nearly 70%.

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Stable India

India is an exception to the global price surge, with petrol and diesel prices remaining unchanged between February 28 and March 19 in major cities such as Delhi, Mumbai, Chennai, Kolkata, Bengaluru, and Hyderabad.

Why Prices Are Frozen in India

India's fuel pricing is not fully market-linked in real time, allowing the government and oil marketing companies to absorb short-term volatility and delay the pass-through of global crude price increases to consumers. However, this temporary disconnect between global oil markets and domestic pump prices will eventually be bridged, either through price hikes or fiscal costs.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Impact of Rising Oil Prices

The impact of rising oil prices extends beyond petrol prices, influencing various sectors such as:

• Transport: higher logistics costs
• Fertilisers: rising food prices
• Manufacturing: costlier goods

Economists warn that large oil shocks have historically preceded periods of high inflation and economic slowdown, with parallels drawn to 1973, 1978, and 2008.