New Delhi, May 11, 2026, 15:32 IST
India’s state-run fuel retailers have absorbed more than ₹1 lakh crore in under-recoveries over 10 weeks, adding pressure on New Delhi to consider a petrol and diesel price increase even as pump rates remained unchanged on Monday. Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp are losing about ₹1,600 crore to ₹1,700 crore a day, reports citing PTI sources said.
The strain matters now because global crude prices have jumped while India has held retail fuel rates steady to shield consumers. Under-recovery means the gap between the local selling price and the benchmark-linked cost of fuel; it does not always equal a cash loss, but it can hit earnings and working capital when crude procurement costs climb.
Prime Minister Narendra Modi’s call for fuel conservation over the weekend gave the issue a sharper market edge. Modi urged work-from-home practices, public transport, carpooling and lower overseas travel as higher energy prices pressure India’s foreign exchange reserves.
Retail fuel prices still had not moved on May 11. Petrol sold at ₹94.77 a litre and diesel at ₹87.67 in Delhi, while Mumbai prices were about ₹103.50 for petrol and ₹90.01 for diesel, according to updated city-rate reports.
The government has not announced a retail hike. Sujata Sharma, joint secretary in the petroleum ministry, said at a briefing that “the endeavour so far has been to see that there is no price increase,” while not directly answering whether prices would remain frozen. The Economic Times
The crude shock has turned broader. Brent futures jumped 4% in Asian trade to $105.7 a barrel after U.S.-Iran peace talks hit a stalemate, Reuters reported, raising risks for India’s import bill, inflation and current account deficit.
Indian markets reflected that concern. In morning trade, the Nifty 50 fell 1.16%, the Sensex lost 1.28%, the rupee slipped 0.7% below 95 per dollar, and shares of Indian Oil, BPCL and HPCL fell about 2.6%.
“PM’s appeal to the nation is a crisis management response,” VK Vijayakumar, chief investment strategist at Geojit Investments, said, adding that sectors tied to fuel, travel, hotels, gold and related demand were hit in sentiment. Reuters
Anish De, global head of energy, natural resources and chemicals at KPMG, said India had withstood the energy shock so far, “but that strength is eroding fast.” He said oil companies’ balance sheets had become “very brittle” because large additional costs had not been passed on for petrol and diesel. Business Standard
The state retailers have raised prices selectively, not across the pump. Indian Oil increased prices for industrial LPG and jet fuel for foreign airlines from May 1, while household LPG and domestic airline jet fuel were left unchanged.
Private-sector peer Reliance Industries has also felt the squeeze. Reuters reported last month that Reliance, operator of the world’s biggest refining complex, flagged “unprecedented” supply disruptions and a sharp hit to profit in March-quarter earnings. Reuters
Inflation is another channel. A Reuters poll of 46 economists forecast India’s April consumer inflation at 3.80%, up from 3.40% in March, as higher fuel costs began feeding into prices. Rahul Bajoria, head of India and ASEAN economic research at BofA Securities, said he expected headline inflation to tick up on higher food prices and some pass-through of global energy costs.
The main risk to a near-term hike call is a quick fall in crude or another fiscal move by the government. But New Delhi has said it has no plan to compensate state fuel retailers for selling transport fuels below market prices, and the Centre has already cut fuel excise duties, a move reports said costs about ₹14,000 crore a month in revenue.
That leaves a blunt policy choice: pass more of the oil shock to consumers, borrow or delay spending at the oil companies, or absorb more of the cost through the budget. None is painless, and the next move will likely be decided in Delhi, not at the pump.
