Petrol and Diesel Price Hikes in India Compared to Global Standards

India's Fuel Price Increases Remain Relatively Low Amid Global Disruption

A recent comparison of global pump prices and retail revisions between February and May 2026 has revealed that India's cumulative increase in petrol and diesel prices during the Strait of Hormuz disruption remains among the smallest across major economies.

The comparison comes after state-run oil marketing companies (OMCs) raised petrol and diesel prices in four rounds on May 15, 19, 23, and 25, marking the first material increase in domestic retail fuel prices in nearly four years. In Delhi, petrol prices rose from Rs 94.77 per litre before the disruption to Rs 102.12 per litre after the latest revision, while diesel increased from Rs 87.67 to Rs 95.20 per litre.

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The revisions followed a sharp rise in global crude prices after the closure of the Strait of Hormuz on February 28, a disruption that tightened energy supplies across major importing economies. Global fuel prices rose far more sharply, with several economies recording substantially larger increases in retail fuel prices over the same period.

Among developed economies, petrol prices in several European countries crossed the equivalent of Rs 180 per litre by May 2026. The EU-27 weighted average stood at about Rs 179 per litre for petrol and Rs 184 for diesel. In comparison, Delhi petrol prices after the latest revision stood at about Rs 102 per litre and diesel at Rs 95 per litre.

The comparison also shows that several neighboring countries, including Pakistan, Nepal, Sri Lanka, and Myanmar, retail petrol above Rs 130 per litre despite lower per-capita incomes than India. The United States and subsidizing Gulf economies such as the UAE and Malaysia remained among the few large markets with lower retail fuel prices, aided either by lower fuel taxation structures or direct state subsidies.

India's fuel price trajectory since 2021 has been marked by multiple reductions in central taxes and retail prices. On November 4, 2021, the Centre cut excise duty by Rs 5 per litre on petrol and Rs 10 on diesel ahead of the Russia-Ukraine conflict. A second excise duty cut followed on May 21, 2022, reducing petrol prices by another Rs 8 per litre and diesel by Rs 6. OMCs reduced retail prices by Rs 2 per litre in March 2024, while another Rs 2 cut followed in April 2025 through lower excise duties. On March 27, 2026, the government reduced the Special Additional Excise Duty (SAED), cutting petrol duty by Rs 10 per litre and taking diesel excise duty to zero.

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According to figures during the March 27 announcement, the latest SAED reduction alone is estimated to cost the exchequer about Rs 30,000 crore in FY27. The four OMC revisions in May partially passed on higher crude costs to consumers after nearly 78 days of unchanged retail pricing despite elevated international oil prices.

Refinery gate under-recoveries had widened sharply during the peak of the crude price spike. According to figures released by the Press Information Bureau on March 27, under-recoveries stood at about Rs 26 per litre on petrol and nearly Rs 82 per litre on diesel at the peak of the disruption. Industry estimates showed OMCs were absorbing close to Rs 1,000 crore a day in losses during the period when retail prices remained unchanged.

State taxes widen retail fuel price differences while central excise duty remains uniform across the country. Retail prices vary between states because of different VAT structures imposed by state governments. Data compiled from state fuel tax structures show petrol prices remained above Rs 110 per litre in Telangana, Kerala, Karnataka, Madhya Pradesh, and Bihar after the latest revisions.

The differences reflect varying state VAT rates, per-litre levies, and infrastructure cesses imposed by state governments. The latest fuel price debate has also revived comparisons with retail fuel prices during the UPA era. Congress leaders have argued that petrol prices were significantly lower in 2014. Government officials and BJP leaders have countered that the earlier pricing structure relied partly on oil bonds issued between 2005 and 2010 to compensate OMCs for losses without immediately passing on higher costs to consumers.

According to data, oil bonds issued during that period amounted to about Rs 1.34 lakh crore. Successive Union Budgets since FY22 have included repayments toward principal and interest liabilities linked to those bonds. Government data show repayments of about Rs 10,000 crore in FY22, Rs 31,150 crore in FY24, Rs 52,860 crore in FY25, and Rs 36,913 crore in FY26.

The Centre has argued that the current approach of reducing excise duty involves direct fiscal absorption rather than deferred liabilities through bond issuances.