The public sector oil marketing companies (OMCs) on Tuesday raised the retail price of petrol and diesel by around 90 paise a litre, making it the second hike in less than a week.
The increase pushed up petrol prices in New Delhi to ₹98.64 per litre from ₹97.77, while diesel rose to ₹91.58 from ₹90.67 a litre. On May 15, the OMCs raised the retail prices of petrol and diesel by around ₹3 per litre and compressed natural gas (CNG) by ₹2 per kg.
Dhananjay Sinha, CEO & Co-Head Institutional Equities at Systematix Group, said, “This is on expected lines. The initial ₹3 hike was significantly small compared to the under recovery faced by OMCs. It covered only 8 per cent. We had been expecting a cumulative rise of 15 odd rupees. It appears the government has chosen to allow small but frequent rises.”
The retail prices of petrol and diesel had been unchanged since March 2024. They were last reduced by ₹2 per litre ahead of the Lok Sabha elections in 2024. Effectively, the prices have been raised for the first time after April 2022.
War impact
Sources said the impact of the West Asia conflict and the resultant increase in cost of crude oil, LPG and LNG, which has been absorbed by the PSU OMCs, has severely impacted the refiners. Besides, a weak rupee vis-a-vis the US dollar is further exacerbating the crisis.
“The two raises hardly make up for the losses. Sure, the government is doing cross subsidisation by increasing commercial LPG, CNG prices, but that is not enough. We expect at least a couple more hikes in retail prices of petrol and diesel in Q1 FY27,” said a senior executive with a top refiner.
Sinha emphasised that inflationary pressure is likely to accentuate as a consequence. The WPI inflation is rising to 8.4 per cent in April and it could rise beyond 10 per cent soon.
Besides, retail inflation is also expected to rise to 6-7 per cent in the second half of FY27. All of this is likely to impact reach income of households and their spending power, thereby slowing the overall growth, he added.
The government is also trying to contain the oil import bill and limit fuel consumption. Last week, Prime Minister Narendra Modi urged people to conserve fuel, work from home and reduce non-essential travel.
Published on May 19, 2026