Crude oil vs petrol prices: why India pump rates stick

What sparked the latest debate

Crude oil prices have surged close to $120 per barrel amid the US-Iran conflict and disruptions in the Strait of Hormuz. Yet retail petrol and diesel prices in India remained unchanged on Monday, reigniting the crude-to-pump pricing debate online. In Delhi, petrol is still Rs 94.77 per litre and diesel is Rs 87.67. In Mumbai, petrol is Rs 103.54 and diesel is Rs 90.03. The discussion is also being fuelled by claims that pump prices have barely moved since May 2022. Another flashpoint is the argument that consumers did not see a pass-through even after a reported over 20% decline in Brent and US crude last year. At the same time, cooking gas and industrial diesel and high-grade petrol saw more frequent adjustments. The core question being asked is simple: if crude is volatile, why do Indian retail prices look fixed.

Delhi vs Mumbai shows the tax layer clearly

A key reason petrol costs more in Mumbai than Delhi is not crude, but state taxation. The context being shared online often cites the October 16, 2021 snapshot. On that date, petrol in Delhi was Rs 105.5 per litre and diesel was Rs 94.2 per litre. In Mumbai, petrol was Rs 111.7 per litre and diesel was Rs 102.5 per litre. The difference was attributed to different tax rates levied by the respective state governments. These city-to-city gaps persist even when the underlying product is the same. That is why people compare prices across locations to argue the market is not fully unified. The comparison also helps explain why a national crude movement does not translate into a uniform retail reaction. It frames the debate as a tax issue as much as an oil issue.

How petrol prices are built at the pump

The retail price structure being discussed is straightforward in principle. Petrol prices are built from the base fuel price, plus central excise duty, plus dealer commission, plus state VAT. The base cost is linked to global crude prices and the rupee-dollar exchange rate. This linkage matters because India imports over 80% of the crude it consumes, and another cited line puts the share at more than 85%. The first three components are relatively consistent across the country. State VAT is the component that varies widely because each state sets its own rate. As a result, the same base fuel can produce very different end prices. This is why crude alone cannot explain differences between states or cities. It also explains why the debate often shifts quickly from crude charts to tax policy.

State VAT drives the wide price spread across India

Social media discussions frequently point to how large the state-wise spread has become. As of March 2026, petrol prices ranged from roughly Rs 82 a litre in Andaman and Nicobar to more than Rs 109 in Andhra Pradesh. That is a spread of more than Rs 25 per litre for essentially the same fuel. Crude oil does not explain that difference, according to the shared commentary. State taxation does. This is also why there is no single nationwide retail price even with the same crude input. India effectively has multiple tax regimes sitting on top of the same fuel supply chain. The crude may be global and refining may be national, but the final bill is shaped by the state. For consumers, that makes local VAT a bigger driver of the final rupee figure than daily crude headlines.

Daily price revision exists, but retail prices can still stay flat

Public sector oil marketing companies revise retail prices daily, according to changes in global crude oil. That statement is widely reposted whenever crude spikes or falls. But the same context also notes that retail prices of normal petrol and diesel have remained largely unchanged since May 2022. One explanation shared is that oil marketing companies can absorb parts of global crude price surges, shielding consumers from sudden spikes. This absorption is described as part of a counter-cyclical leverage model. The idea is that when crude is low, retail prices can remain elevated, generating higher margins. Those profits can help absorb later periods of losses when crude rises and retail prices do not move. This framework is used to explain why the pump price does not mirror every global move. It also explains why stability at the pump can come at the cost of pressure on company margins.

Past episodes show taxes and timing can mute crude signals

The June 2014 to October 2018 period is repeatedly cited to show the crude-to-retail link can weaken. Global crude fell sharply between June 2014 and January 2016, then rose from February 2016 to October 2018. Yet retail selling prices remained stable during the entire period, based on the shared notes. The reason given for this disparity was subsequent changes in taxes. Another cited episode is November 2021 to March 2022, when international crude prices were skyrocketing. During that window, retail prices remained unchanged, and the context links the pause to Assembly elections in five states. Separately, the government has stated that domestic petrol and diesel prices have reduced compared to November 2021 levels. These episodes are used online to argue that non-crude factors often dominate retail pricing outcomes. They also show that the timing of revisions can be influenced by policy and broader conditions.

Parliament data revived the crude vs petrol comparison

A fresh round of posts referenced official data indicating crude prices in 2024-25 are nearly the same as in 2013-14, while petrol prices are higher. The Indian Basket of Crude Oil averaged Rs 6,383 per barrel in 2013-14 and Rs 6,643 per barrel in 2024-25. In the same comparison, the average retail selling price of petrol in New Delhi was Rs 69.76 per litre in 2013-14 and Rs 94.74 per litre in 2024-25. Users also highlighted that when crude spiked in 2022-23 to Rs 7,488 per barrel, petrol was around Rs 97-98 per litre, close to current levels. The data is being used to argue that the crude-to-petrol gap has widened gradually since 2014-15. In 2014-15, crude fell from Rs 6,383 to Rs 5,145 per barrel, while domestic petrol fell only slightly from Rs 69.76 to Rs 66.37 per litre. The discussion circles back to taxes and pricing decisions as the main reasons for the mismatch. Below is the comparison being shared most often.

What it means for OMCs, and why consumers see stickiness

When retail prices stay unchanged during crude spikes, oil marketing company margins can get squeezed. One cited estimate from ICICI Securities says OMCs face a loss of Rs 13.5 per litre on diesel and Rs 1 per litre on normal petrol at current retail levels. The same context argues OMCs have been absorbing fluctuations despite deregulation. It also notes crude has fluctuated from over $100 per barrel to $10 a barrel since May 2022, implying profits during low crude could offset later losses. Meanwhile, the last major retail cut highlighted in the discussion was March 2024, when OMCs reduced petrol and diesel by Rs 2 per litre each. Since then, Delhi prices have been cited as flat at Rs 94.77 and Rs 87.67 even when crude moved lower. Government statements in the context reiterate that prices are market determined and linked to international markets, with India importing more than 85% of its crude needs. For households, the end result is a pump price that responds slowly, while differences across states remain large due to VAT. For investors tracking listed OMCs, the key variable discussed online is how long margin pressure lasts if retail prices remain stable during volatile crude.