Kathmandu– Amid supply chain pressures caused by the ongoing war in the Middle East, India’s state-owned fuel companies have once again increased the prices of petrol and diesel. This marks a fourth hike in the last 10 days, reflecting persistent instability in the country’s fuel market.
Since the outbreak of the war in February, the price of automotive fuel in India has risen by approximately five percent. The escalation stems directly from tensions involving US-Iran war and the instability in the Strait of Hormuz, a vital global energy corridor.
As the world’s third largest oil consumer, India receives half of its oil supply from this waterway. However, in an attempt to mitigate rising regional risks, the country has shifted 70% of its crude oil imports to alternate routes.
The financial strain on India’s state-run oil marketing companies (OMCs) has become a primary concern for policymakers, as they struggle to absorb the surging costs of global crude. Union Petroleum and Natural Gas Minister Hardeep Singh Puri recently acknowledged that these companies are collectively incurring losses of nearly 120 million U.S. dollars every day. Despite these mounting under-recoveries, the government maintains that it has successfully ensured an ‘uninterrupted energy supply’ across the nation, preventing the shortages that have triggered panic-buying in other parts of the world.
Looking ahead, analysts warn that these continued price adjustments could have a cascading effect on the broader economy. With transportation and logistics costs rising, there is growing concern that the cost of essential goods and food products will face upward pressure in the coming months. In response, Prime Minister Narendra Modi has emphasized the need for ‘consumption discipline,’ urging citizens to manage fuel usage more efficiently as part of a national strategy to safeguard foreign exchange reserves and navigate the volatility of the global energy market.
