Petrol, diesel price hike risk in 2026 as OMC losses widen

What government sources are signalling

Government sources said the possibility of a petrol and diesel price hike in the near future is not ruled out, as state-run fuel retailers face mounting losses and global energy markets remain volatile. The remarks come amid speculation about a revision in retail fuel rates after assembly elections in four key states. The sources indicated that the Centre may raise prices in view of losses and prevailing global energy market conditions.

At the same time, the messaging from the government and the industry remains calibrated. Oil marketing companies (OMCs) have held regular retail prices steady for an extended period, while some other petroleum products have seen revisions that track international input costs.

Minister’s assurance and the “necessary decisions” line

Union Minister for Petroleum and Natural Gas Hardeep Singh Puri said the country will be shielded from the global shock, and highlighted that prices have not been increased in the last four years. He added that if the time comes, the government will take the necessary decisions.

The remarks reflect a balancing act between consumer price stability and the financial strain on fuel retailers when global crude and product prices rise. While the minister’s statement emphasised insulation from global shocks, the government sources’ comments left open the option of a near-term adjustment.

IOC’s stance on retail petrol, diesel and domestic LPG

Indian Oil Corporation (IOC), speaking on behalf of the industry, said petrol and diesel prices and domestic LPG rates are not being increased despite a surge in international energy costs. This statement reinforces the point that regular retail pricing has remained steady even as energy costs moved higher internationally.

Alongside that, state-run oil firms have raised prices of certain products that are more directly exposed to market-linked pricing. These include commercial LPG, industrial diesel, 5-kg LPG cylinders, and jet fuel sold to international airlines, in keeping with the cost.

The losses being cited by officials

A senior oil ministry official had told a news briefing that state-owned fuel retailers were incurring losses of about Rs 20 per litre on petrol and roughly Rs 100 per litre on diesel, as pump prices remained frozen for nearly four years despite a surge in global oil prices. The official had also said there was no plan to increase prices at that time.

In a separate clarification posted by the Ministry of Petroleum and Natural Gas on X, the ministry said that with global petroleum prices up by up to 100% in the last 1 month, PSU OMCs are incurring under-recoveries of Rs 24.40 per litre.

Retail prices: what consumers are paying in Delhi

Retail petrol and diesel prices have remained frozen since early April 2022, a period in which oil prices rose in some months and fell in other times. During periods when prices fell, state-owned oil firms made profits that were used to set off losses when rates rose.

As per the information cited, petrol is currently priced at Rs 94.77 a litre in Delhi, and diesel comes for Rs 87.67 per litre. The ministry also reiterated that regular petrol and diesel prices in Delhi remain unchanged at Rs 94.77 per litre and Rs 87.67 per litre, respectively.

Commercial LPG hike adds to pricing focus

Separate from regular automotive fuels, commercial LPG saw a sharp revision. The price of commercial LPG was hiked by Rs 993 per 19-kg cylinder, described as the steepest ever increase, and marked the third straight monthly increase. The cited reason was rising global energy prices linked to the West Asia conflict.

The ministry also said commercial LPG cylinders, primarily used by industries and hotels, account for less than 10% of total LPG consumption, and their prices are market-determined and revised monthly.

Premium petrol increases, regular fuel unchanged

The government also said there has been no price increase on regular petrol for consumers and that a hike was limited to the premium fuel category. The premium category accounts for about 3-4% of total petrol sales.

Officials stated that petrol and diesel prices are deregulated and determined by OMCs. OMCs increased the price of premium petrol by over Rs 2 per litre with immediate effect amid rising global crude prices triggered by escalating tensions in West Asia, while regular petrol was not increased at that moment.

Ministry pushes back on post-poll hike reports

The Petroleum Ministry dismissed reports of a post-poll fuel price hike as “fake”, even as government sources told PTI that a hike in the near future cannot be ruled out. This contrast underscores the sensitivity of fuel pricing in a period of heightened public attention and global crude volatility.

For markets and consumers, the key takeaway is that regular retail prices have remained unchanged so far, but official commentary has left the door open to future action depending on conditions.

Market impact: why OMC pricing matters

The reported losses and under-recoveries are closely watched because they affect the financial performance of state-run fuel retailers when retail prices stay frozen amid rising global energy costs. The situation also shapes expectations around how quickly retail prices may reflect changes in international crude and product prices.

The product-wise approach described in the reports also matters. While regular petrol, diesel and domestic LPG have been held steady, the adjustment in commercial LPG and other categories signals that some segments are being used to pass through higher costs in line with market pricing.

Key figures at a glance

Conclusion

Reports and official comments show that regular petrol and diesel prices have stayed frozen since early April 2022, even as global energy costs surged and OMCs reported losses and under-recoveries. Government sources said a near-term hike cannot be ruled out, while the minister and IOC reiterated that regular retail and domestic LPG prices have not been increased so far. The next set of cues is likely to come from further government communication and any pricing decisions taken in response to ongoing global energy market conditions.