NEW DELHI, May 9, 2026 — Petrol and diesel prices in India could be hiked before May 15, and for the first time in over four years, the government appears to have run out of ways to delay, as per sources cited by BusinessToday. State-owned oil marketing companies IOC, BPCL, and HPCL are collectively absorbing under-recoveries of nearly ₹30,000 crore every month. Brent crude closed at $101.73 per barrel on May 8, having hit a 52-week high of $126.41 earlier, up nearly 59% year-on-year, driven by sustained disruptions to the Strait of Hormuz. Retail fuel prices at the pump have not moved since April 2022.
Key Facts at a Glance
Brent Crude (May 8, 2026): ~$101/barrel
OMC Loss per Month: ₹30,000Cr
Loss on Petrol: ₹18/litre
Loss on Diesel: ₹35/litre
Petrol Prices Frozen Since: April 2022
Hike Expected: Before May 15, 2026
The Numbers Behind the Crisis: ₹18/Litre on Petrol, ₹35/Litre on Diesel
The per-litre loss figures are severe. According to Macquarie Group, at crude prices between $135–165 per barrel, OMCs lose ₹18 on every litre of petrol and ₹35 on every litre of diesel sold. ICRA currently puts losses at ₹14/litre on petrol and ₹18/litre on diesel, a more conservative but still damaging estimate. The government already cut excise duties by ₹10 per litre on petrol and diesel to cushion the blow, which brought OMC daily losses down from roughly ₹2,400 crore to ₹1,600 crore at peak. That is still nearly ₹58,000 crore annualised in excise revenue forgone, before counting OMC shortfalls.
Macquarie estimates every $10 rise in crude adds another ₹6/litre to those losses. India’s annual capex commitment of ₹1.3–1.5 lakh crore for refinery expansions, including Numaligarh and Barmer, only makes the financial equation tighter.
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Strait of Hormuz: The Chokepoint Forcing Delhi’s Hand
About 20% of the world’s oil supply moves through the Strait of Hormuz. The IEA has warned the conflict is removing around 14 million barrels per day from global supply. The Strait has been effectively closed since late February. India imports over 85% of its crude oil requirements, so this is not a geopolitical abstraction; it is a supply emergency with a direct rupee cost.
The government’s earlier calculation was defensible: past ceasefires had resolved within weeks, and crude would soften. That bet has not paid off. Crude ran from $70 per barrel last year to a 52-week high of $126.41 before settling around $101 on May 8. India diversified crude sourcing from 27 countries in 2022 to 40 countries today, ramped up domestic LPG production from 36,000 to 54,000 tonnes per day, and has been running refineries at over 100% capacity. None of that changes the retail pricing math.
Elections Are Done. The Political Cover Is Gone.
This is the detail most coverage glosses over. Assembly elections in West Bengal, Tamil Nadu, Assam, Kerala, and Puducherry, which were the government’s primary political reason to hold prices, concluded on May 4, with vote counting beginning the same day. The pause in prices came amid heightened political sensitivities as the country awaited the results of the assembly elections recently conducted in West Bengal, Assam, Tamil Nadu, Kerala, and Puducherry.
Those results are now out. The political cover has expired. With no state election on the immediate horizon and OMC balance sheets deteriorating every week, the government has lost both its geopolitical and electoral justifications for the freeze simultaneously. That combination, more than any single crude price level, is what makes a pre-May 15 hike the base case now.
What the Government Actually Said and What It Didn’t
At an inter-ministerial briefing in New Delhi, Joint Secretary of the Ministry of Petroleum and Natural Gas Sujata Sharma said there are “no immediate plans” to hike fuel prices. She confirmed OMCs have ensured uninterrupted supply and no rationing. Both are accurate. But the statement is carefully worded; it rules out nothing beyond the immediate term. Sources cited by Moneycontrol indicate a ₹2–4/litre hike is coming soon.
Analysts tracking the Hormuz disruption scenario have a higher number, one round of ₹10/litre, with further rounds if crude stays elevated. “Continued closure of the SoH will force the government to raise retail fuel prices,” one analyst note stated plainly, adding that a larger single hike poses “too many macro risks” at once. The ₹10/litre first round, followed by more if needed, is the working scenario most analysts are pricing in.
The Quiet Hike Already Underway, Industrial Users Are Paying More
What stood out was this: retail prices haven’t moved, but industrial prices already have, and significantly. IOC raised bulk diesel prices by ₹22/litre to ₹109.59. BPCL followed with an ₹18.75/litre increase on bulk diesel. Commercial LPG was hiked by ₹993 from May 1; a Delhi 19 kg cylinder now costs ₹3,071.50. Premium petrol went up ₹2–2.35/litre. IOC’s own statement confirmed retail petrol, diesel, and domestic LPG were “unchanged for the general public, which constitutes around 90% of total consumption.”
The segmented approach, shielding households and passing costs to commercial users, is a deliberate policy buffer. Logistics companies, hospitality, catering, and aviation are already absorbing the squeeze. Airlines had warned of potential groundings at sustained elevated ATF costs. When the retail-side hike comes, the inflation pass-through to freight, food, and transport will be layered on top of commercial costs already rising.
OMC Stocks: What a ₹1/Litre Margin Shift Means for IOC, BPCL, HPCL
JM Financial is direct on the earnings sensitivity: every ₹1/litre change in auto fuel gross marketing margin moves consolidated EBITDA by 16.6% for HPCL, 14.5% for BPCL, and 12.4% for IOC. IOC has been trading between ₹145–146, well off its 52-week high of ₹188.96. ICRA has a Moderate Buy consensus on IOC with a 12-month target of ₹165–168, implying 13–18% upside, contingent on margin normalisation. JM maintains a Sell on HPCL and reduces on both BPCL and IOC. The OMC rally thesis only works cleanly if the hike is large enough to meaningfully close the under-recovery gap. A ₹4–5/litre move does not fully do it at current crude levels. A ₹10/litre hike is a start, not a resolution.
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FAQs
Q: By how much will petrol and diesel prices increase in India in 2026?
Government sources cited by Moneycontrol indicate ₹2–4/litre in the immediate round. Analysts modelling the Strait of Hormuz disruption scenario expect a first round of ₹10/litre, with further hikes if crude stays above $100. At Brent, near $101/barrel, a ₹4/litre hike does not close the under-recovery gap, it narrows it. No official figure has been confirmed as of May 9, 2026.
Q: Which OMC stocks benefit most from a fuel price hike: IOC, BPCL, or HPCL?
Every ₹1/litre improvement in gross marketing margin moves EBITDA by 16.6% for HPCL, 14.5% for BPCL, and 12.4% for IOC per JM Financial. However, JM maintains a Sell on HPCL and Reduce on BPCL and IOC; current valuations already price in some margin recovery. The rally only has legs if the hike is large enough to materially close underrecoveries.
Q: Why hasn’t India raised petrol and diesel prices since April 2022 despite crude oil surging?
Two reasons held the price freeze in place: state elections and a geopolitical bet that West Asian ceasefires would lower crude quickly. West Bengal, Tamil Nadu, Assam, Kerala, and Puducherry elections concluded May 4. The ceasefire assumption has not materialised, crude is up roughly 59% year-on-year. Both justifications for the freeze have now expired simultaneously.
Watch May 15: Sources indicate this is the window for an OMC price revision announcement. The key data trigger is Brent crude’s weekly close; if it holds above $100, the government has no credible case to delay further. IOC, BPCL, and HPCL Q1 FY27 earnings will be the first clean read on how deep the under-recovery hole has gone. India’s April fuel consumption was already up 6.1% year-on-year per Oil Ministry data, meaning volume losses from a price hike will be limited, but the inflation pass-through to freight, logistics, and food will not be.
Current Retail Prices (May 9, 2026 — Unchanged)
Delhi: Petrol ₹94.77/litre | Diesel ₹87.67/litre Mumbai: Petrol ₹103.54/litre | Diesel ₹90.03/litre
Important Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Readers should consult a certified financial advisor before making investment decisions.
