Since the Gulf crisis began on February 28, 2026, India’s oil retailers—Indian Oil, Bharat Petroleum, and Hindustan Petroleum—have faced tough times. Together, they control about 90% of the country’s oil market. They absorbed heavy losses initially but started increasing prices this week. In just ten days, petrol prices in Delhi soared to ₹102.12, while diesel reached ₹95.20. This marks their highest levels since May 2022.
The bigger picture reveals even more concerning statistics. India’s monthly crude oil import bill hit a staggering $13.07 billion in March 2026, the highest in over a year, even as the amount of crude oil imported decreased. The price per tonne of imported crude jumped 53% from $451 in January to $688 by March.
According to the Petroleum Ministry, the loss gap for these state-run companies was about ₹1,000 crore per day in early May. The immediate trigger for price hikes is the situation in the Strait of Hormuz, a critical oil shipping route. Trade there has faced severe disruptions due to the ongoing US-Israel-Iran conflict, affecting around 40% of India’s crude imports and 90% of its liquefied petroleum gas.
As oil prices surged from around $63.80 to nearly $110 per barrel, refiners also faced increased shipping costs. The weakening of the rupee means that each imported barrel becomes even more expensive. The government has ramped up cooking gas production to mitigate the situation, but customers won’t see the effects right away.
There’s another trend unfolding. Diesel is now being sold by refiners to industrial buyers at prices at least ₹40 higher than at retail pumps. This has led trucking companies and manufacturers to fill up at local petrol stations instead, causing a spike in retail sales. Indian Oil reported an 18% increase in diesel sales this May compared to last year, with petrol sales also rising by 14%. However, some of this demand may be seasonal, as farmers prepare for the kharif sowing season.
Experts have mixed views on how much this will impact India’s economic growth. The Reserve Bank of India expects GDP growth at 6.9% for the fiscal year ending March 2027, while Goldman Sachs recently lowered its estimate to 5.9%. The government is under pressure, with Finance Minister Nirmala Sitharaman noting that rising fuel costs can affect everything from shipping to export orders.
The next steps are crucial. The Monetary Policy Committee is set to meet soon, and decisions will need to be made on interest rates. Neighboring Indonesia has already increased its rates to stabilize its currency. As prices keep rising, many across India are left wondering if this is just the beginning.
For more information on energy market dynamics, check out this Reuters article.
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india fuel prices, gulf crisis, strait of hormuz, crude oil imports, indian oil corp, bharat petroleum, hindustan petroleum, diesel prices delhi, brent crude, nirmala sitharaman
