West Asia War Impact: Indian Consumers Hit By Petrol, Diesel Price Hike May Encounter Another Spike Soon

(MENAFN- Live Mint) Indian consumers - struck by the first petrol price rise in 48 months - shall probably encounter additional spikes shortly, as the Narendra Modi administration navigates the financial fallout of a protracted military conflict in the Persian Gulf.

Following a period of conjecture, India's government-run refiners at last declared a hike in diesel and petrol costs on Friday - albeit merely by ₹3 per litre, a margin too slight to balance petroleum costs exceeding $100 per barrel or dampen consumption.

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Additional increases will be permitted to bridge that deficit, yet they shall be distributed gradually to restrict the blow for typical families, as per sources acquainted with the situation. Another 2-4 rupee jump is anticipated shortly if oil costs stay elevated, they mentioned, requesting anonymity since they lack clearance to speak to the press.

Refiners seek ₹15-20 per litre hike

Public-sector refiners have suggested they must add nearly ₹15 to ₹20 per litre to handle the prevailing emergency.

The government fuel vendors in India manage 90% of the nation's stations, and are technically autonomous in setting tariffs. However, the state is a primary investor in these massive refiners, and has maintained pump costs fixed since March 2024 - electing to protect residents at the price of tightening refiners' profits.

Union Petroleum Minister Hardeep Puri stated earlier this week that public refiners were shedding ₹10 billion daily by offloading fuels below market rates. Even following the price rise, the firms are still dropping half that amount on transactions of diesel, petrol and liquid petroleum gas, noted Prashant Vasisht, senior vice president at analyst firm ICRA Ltd, according to Bloomberg.

“This is a conundrum several governments around the world are facing,” Vandana Hari, founder of analysis firm Vanda Insights, said, according to Bloomberg.

“It's time to tighten our belts. More fuel price hikes will need to come if the situation doesn't ease soon,” Hari added.

Modi calls for lower fuel usage

In an effort to help mitigate those deficits and strain on the national treasury, Modi's administration has also intensified initiatives to lower fuel usage. The prime minister utilized a rare weekend plea to encourage residents to work remotely when feasible, utilise mass transit and transition to electric cars. Delhi's regional administration has requested staff to work virtually two days weekly, vary office timings and move more consultations online to reduce traffic and save energy.

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On Sunday, Modi advised that imported fuel should be utilised only when necessary. He noted that such restraint would conserve foreign exchange and mitigate the economic shocks caused by international conflict.

"Today, the need of the hour is also to use petrol, gas, diesel and such things with great restraint. We have to use imported petro products only as per need. This will not only save foreign exchange but reduce the adverse impact of war," he had said.

India freed petrol rates in 2010 and diesel in 2014, with refiners moving to everyday updates in 2017. Yet actual daily corrections were halted in April 2022 as the state pressured public vendors to safeguard buyers from international instability.

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