New Delhi, 15 May 

Petrol and diesel prices were hiked by Rs 3 per litre each on Friday, marking the first increase in more than four years, as state-run fuel retailers passed on part of the hit from surging global crude prices triggered by the Iran war.

Alongside, CNG prices in cities like Delhi and Mumbai were raised by Rs 2 per kg.

Petrol price in the national capital has been increased to Rs 97.77 per litre from Rs 94.77, while diesel now costs Rs 90.67 as against Rs 87.67 per litre previously, industry sources said.

Rates vary across states due to differences in value-added tax.

CNG in Delhi now costs Rs 79.09 per kg, and in Mumbai it costs Rs 84. However, prices of both natural gas piped into household kitchens for cooking, called piped natural gas, and domestic cooking gas LPG remained unchanged.

Global crude oil prices have surged more than 50 per cent since US-Israeli strikes on Iran on 28 February and Tehran's subsequent retaliation disrupted energy flows through the Strait of Hormuz, a key artery for global oil shipments.

Despite the surge in crude prices, retail fuel rates were kept frozen as part of what the government said was an effort to shield price-sensitive consumers from higher global energy costs. But the opposition parties saw political motives behind the move as key states went to the polls.

The increase in fuel prices followed the completion of elections and the ruling Bharatiya Janata Party expanding its influence after winning three of five states, including West Bengal.

After the increase, petrol and diesel prices are now the highest since May 2022.

Prices have remained frozen since April 2022, but for a one-off reduction by Rs 2 a litre each on petrol and diesel in March 2024, just before the Lok Sabha elections. Rates were last hiked in April 2022.

Petrol in Mumbai now costs Rs 106.68 a litre and diesel comes for Rs 93.14 per litre. In Kolkata, petrol now costs Rs 108.74 per litre and diesel Rs 95.13, while in Chennai, prices increased to Rs 103.67 for petrol and Rs 95.25 for diesel.

Industry sources said the price hike is modest relative to the rise in crude prices and still leaves retailers absorbing losses estimated at Rs 11 per litre on petrol and Rs 39 per litre on diesel.

Friday's move follows excise duty cuts announced in March and comes as the government rolls out measures to curb fuel consumption and contain the country's oil import bill. Prime Minister Narendra Modi this week urged fuel conservation, work-from-home practices and reduced travel as higher energy prices strain India's foreign exchange reserves and threaten to widen the current account deficit for a third straight year.

Some state governments have already instructed departments to limit travel, avoid physical meetings and operate with reduced office staffing.

Analysts said the fuel price increase, combined with conservation measures, could dampen demand growth.

Prashant Vasisht, Senior Vice President and Co-Group Head, Corporate Ratings. ICRA Ltd said the "modest" hike provides limited relief to the oil marketing companies.

"ICRA estimates that at a crude price of USD 105-110 per barrel and considering the past 10-year average crack spreads of auto fuels, oil marketing companies incur a loss of about Rs 500 crore daily on the sale of auto fuels and domestic LPG, even after factoring the fuel price hike. Accordingly, the oil marketing companies would need to relook at the retail prices in case elevated crude oil prices persist," he said.

Private fuel retailers had already increased pump prices. Nayara Energy, the country's largest private fuel retailer, in March raised petrol prices by Rs 5 per litre and diesel by Rs 3, while Shell increased petrol prices by Rs 7.41 and diesel by Rs 25 per litre from April 1. In Bengaluru, Shell sells petrol at Rs 119.85 per litre and diesel at Rs 123.52.

Domestic cooking gas LPG prices were raised in March by Rs 60 per cylinder, but they are still way lower than the actual cost. Oil companies are losing Rs 674 per 14.2-kg cylinder of LPG.

Industry sources said the price hike appears calibrated - enough to partially ease margin pressure on oil companies without creating major inflationary shock.

The increase, however, will have some impact on inflation, they said.

India's retail inflation, measured by the Consumer Price Index (CPI), rose to 3.48 per cent in April 2026 from 3.40 per cent in March, while wholesale price inflation (WPI) surged to 8.3 per cent, a 42-month high, driven by a sharp rise in fuel and energy prices amid elevated global crude oil rates.

Petrol and diesel do not have a standalone category in the CPI basket, but are captured under the broader 'transport and communication' component and 'fuel and power' category.

Petrol and diesel carry relatively smaller but still significant weights through transport-related items, and economists say fuel price hikes have a wider indirect impact because they raise freight, logistics and input costs across sectors.