Petrol & Diesel Prices Surge Globally: Why India Saw Only A 4% Rise

The surge in crude oil prices globally due to US-Iran tension and subsequent problems at the Strait of Hormuz has led to an increase in petrol and diesel prices. Brent crude price breached the mark of $100 per barrel as supply issues worsened, compelling governments to increase fuel prices.

Similarly, India has also increased fuel prices because it is importing over 85% of its requirement of crude oil. But, when compared to several other economies of the world, the increase has been fairly small because of frequent reductions in excise duties and intervention by the government.

The public sector oil marketing companies, including IOCL, BPCL, HPCL, etc., maintained stable prices between February 23, 2026, and May 15, 2026, despite the increase in crude prices.

Under-recoveries before the increase in prices were nearly ₹1,000 crore per day. The prices of petrol and diesel have been increased two times lately, initially by ₹3 per liter and then by about 90 paise per liter. This was the first major increase in fuel prices after four years.

India’s Fuel Price Rise Lowest Among Major Economies

India’s petrol prices increased 4.2% and diesel prices rose 4.4% between February 23 and May 15, 2026, much lower than many global peers.

Countries which relied on crude oil from West Asia and international shipping lanes experienced the highest rise in fuel prices. Petrol prices rose by more than 50% in Pakistan, Malaysia, and the UAE. Diesel prices went up even higher because of increased transport and logistics costs.

Even developed nations experienced an increase in their fuel prices. In the USA, where fuel prices have a direct correlation with crude oil prices, petrol prices rose by nearly 45% and diesel prices by 48%. The same is true for Europe where petrol prices rose in countries like France, Germany, and the UK.

India Reduced Excise Duties Multiple Times

There have been multiple reductions in excise duties in India since 2021 to shield consumers from global oil shocks arising due to the Russia-Ukraine conflict and the Strait of Hormuz disruption subsequently.

The reduction of excise duties took place twice during November 4, 2021, and May 21, 2022. In total, the reduction caused petrol prices to fall by ₹13 per litre and diesel prices by ₹16 per litre.

Subsequent reductions took place in 2024, 2025, and March 2026. On March 27, 2026, there was an exceptional reduction in Special Additional Excise Duty where petrol excise duties were slashed to ₹3 per litre and diesel excise duties to zero.

Despite all these actions, global crude prices breached the $120 per barrel mark twice between 2022 and 2026. At the peak of the Hormuz disruption, the under-recoveries in refineries were estimated to be ₹26 per litre for petrol and more than ₹80 per litre for diesel.

State Taxes Continue To Impact Retail Prices

There is a huge variation in fuel prices across Indian states on account of VAT and cess differences. Currently, Andhra Pradesh, Telangana, and Kerala are among the states where the price of petrol is high, whereas Gujarat, Uttar Pradesh, Haryana, Goa, and Assam are among the cheapest states for fuel.

Fuel pricing continues to remain politically sensitive.