Petrol and diesel prices in India could see a sharp upward revision after the ongoing Assembly elections, with Kotak Institutional Equities warning of a potential hike of Rs 25–28 per litre as elevated
crude prices continue to pressure refiners.
Crude volatility keeps supply tight
Global oil markets remain volatile amid disruptions around the Strait of Hormuz linked to the West Asia conflict. While Iran briefly allowed transit during a ceasefire, renewed tensions have tightened physical crude supplies again.
Kotak also highlighted a widening gap between crude futures and physical markets, signalling persistent supply stress and limited near-term easing.
Retail fuel pricing under pressure
The surge in crude prices has sharply increased India’s import burden. The Indian crude basket has risen significantly in March and April, and despite a 13–15% drop in import volumes, the daily import bill has climbed by an estimated $190–210 million.
However, retail fuel prices have remained unchanged so far. According to Kotak, this has increased pressure on refiners, with an estimated impact of about Rs 270 billion per month. Government measures such as a Rs 10 per litre excise duty cut and the reintroduction of windfall export taxes have provided only partial relief.
Price hike likely after elections
Kotak noted that while the case for a fuel price hike is strong, the timing is influenced by political considerations. With the final phase of voting scheduled for April 29, any revision is likely only after the elections conclude.
At crude prices of around $120 per barrel, the brokerage estimates petrol and diesel prices may need to rise by Rs 25–28 per litre. However, actual increases could be implemented gradually to balance inflation concerns with the need to offset refining losses.
With crude oil volatility persisting, fuel prices in India appear headed for an upward reset in the coming weeks.
