Government-owned oil marketing companies raised petrol and diesel prices again on Saturday, taking the combined hike to about ₹5 a litre in less than 10 days, stoking fears of inflation.
Prices of both fuels rose by nearly 1 per cent or less than ₹1 rupee, with petrol now retailing at ₹110.64 and diesel at ₹97.02 per litre at Indian Oil Corporation pumps in Calcutta.
Other public sector companies, Bharat Petroleum Corp and Hindustan Petroleum Corp, too, raised prices in the same range. This marks the third increase by the oil majors after holding off hikes in the run-up to state elections despite soaring crude oil prices from March onwards due to the Iran war.
India, which imports 90 per cent of its energy requirement, has been hit hard by the West Asia conflict as supplies shipped through the Strait of Hormuz, a key waterway, have been effectively blocked since the war began in February.
This month, the Centre has rushed to introduce measures to contain the fallout from the conflict, as surging oil prices battered the rupee and triggered record foreign outflows from domestic equities.
Consumer price inflation remained below the RBI’s 4 per cent target, although pressure was mounting on retailers to pass on costs amid mounting losses. Wholesale goods inflation more than doubled to 8.3 per cent in April from the previous month.
Experts say oil prices may go up even more if the government wants to cushion them from continuing losses. “Going forward, some calibrated price revisions may be required. The government will need to balance OMC financial health against the impact on consumers,” Sourav Mitra, partner — oil and gas, Grant Thornton Bharat, said.
Despite the ₹5 a litre hike, oil majors continue to report under recoveries. “The recent back-to-back-to-back price hikes will offer partial relief to OMCs, but not a full cushion. Even if the West Asia situation stabilises, it will take time for risks around the Strait of Hormuz to fully ease, keeping crude prices elevated, likely above $90/bbl,” Mitra added.