Domestic petrol and diesel prices could witness a sharp increase of ₹25–28 per litre after the conclusion of ongoing state elections on April 29, according to Kotak Institutional Equities, which has warned of mounting financial stress on refiners amid a surge in global crude oil prices.

In a recent sector note, the brokerage said the current freeze on retail fuel prices is increasingly unsustainable, with Indian refiners absorbing significant losses as crude costs remain elevated. The brokerage estimates that refiners are currently facing an incremental burden of nearly ₹270 billion per month due to higher crude import costs, even after accounting for excise duty cuts and limited price adjustments in other fuels.

The report highlighted that global oil markets have tightened due to geopolitical disruptions, particularly in West Asia, pushing crude prices sharply higher. India’s crude basket has risen substantially in recent weeks, leading to a steep increase in the country’s import bill despite lower volumes. While many countries have already passed on higher costs to consumers, retail petrol and diesel prices in India have remained unchanged.

Kotak Institutional Equities noted that “the issue is no longer if, but when and by how much” fuel prices will be raised, adding that political considerations have so far outweighed economic realities. With elections underway, any decision to hike prices has likely been deferred, but a revision appears imminent once polling concludes.

Based on its analysis, the brokerage said that assuming crude oil prices remain around current levels and refiners operate at relatively low margins, there is a strong case for a price increase of ₹25–28 per litre for both petrol and diesel. In some scenarios, the required hike could be even higher, depending on the pricing model and margin assumptions.

The report also pointed out that despite a ₹10 per litre cut in excise duties by the central government, the relief has been insufficient to offset the impact of rising crude prices. Meanwhile, retail prices of petrol and diesel have not been revised in line with global benchmarks, leading to under-recoveries for oil marketing companies.

Kotak Institutional Equities cautioned that delaying price adjustments further could strain the financials of refiners and potentially disrupt supply dynamics. It added that a calibrated price hike would not only help limit losses but also signal demand moderation in a high-price environment.

With the final phase of voting scheduled for April 29, market participants are closely watching for any post-election policy action on fuel pricing, which could have a significant impact on inflation and consumer spending in the months ahead.

Published on April 23, 2026