India Fuel Prices Rise Again as Global Oil Tensions Push Petrol Above ₹115 in Several Cities

Fuel prices across India rose again on Monday, May 25, with state-run oil companies increasing petrol and diesel rates for the fourth time in less than two weeks. The latest revision has pushed petrol prices above ₹110 per litre in several cities and renewed concerns about inflation, transport costs, and the wider impact of global oil market tensions on the Indian economy.

According to the latest retail rates released by Oil Marketing Companies (OMCs), petrol in New Delhi is now priced at ₹102.12 per litre, while diesel costs ₹95.20. In Mumbai, petrol has climbed to ₹111.21 per litre and diesel to ₹97.83. Hyderabad remains among the costliest major cities, with petrol at ₹115.73 and diesel crossing ₹103 per litre.

The fresh hike comes after a period of relative stability in retail fuel prices. Since May 15, petrol and diesel prices have risen by nearly ₹7.50 per litre in several parts of the country, reflecting mounting pressure from global crude oil markets and currency fluctuations.

Industry analysts say the current surge is mainly linked to the continuing conflict in West Asia, which has disrupted supply routes through the Strait of Hormuz. The narrow waterway between the Persian Gulf and the Arabian Sea handles a large share of the world’s oil shipments. Concerns over supply interruptions have kept international crude prices volatile over recent weeks.

Brent crude prices have moved close to the $100 to $110 per barrel range during the latest phase of the conflict. India, which imports around 85 percent of its crude oil requirements, remains highly sensitive to changes in global oil prices. Even small disruptions in supply chains can quickly affect domestic fuel costs.

The weakening value of the Indian rupee against the US dollar has added another layer of pressure. Since crude oil purchases are largely made in dollars, a weaker rupee increases the cost of imports for Indian refiners and fuel retailers.

Officials and market experts say state-run fuel retailers had delayed passing on the full impact of rising crude prices to consumers during the early months of the crisis. Reports from industry analysts estimated that OMCs were facing under-recoveries running into more than ₹1,000 crore per day while keeping retail prices unchanged.

With global prices remaining elevated for a prolonged period, oil companies have now started transferring a larger share of the burden to consumers through phased price increases.

The impact of the latest revision is visible across major Indian cities. In Kolkata, petrol prices have crossed ₹113 per litre, while diesel is nearing ₹100. Chennai and Bengaluru have also seen steep increases, reflecting the combined effect of rising base fuel prices and state-level taxation.

Fuel prices in India vary sharply from state to state because petrol and diesel are not included under the Goods and Services Tax (GST) system. Instead, they are taxed separately by the Union government and individual states.

The central government imposes an excise duty, which is usually charged as a fixed amount per litre. State governments then apply Value Added Tax (VAT), which is often percentage-based and differs widely across the country.

Because many states use ad valorem taxation, the amount of VAT collected rises automatically when the base fuel price increases. This means consumers in high-VAT states experience sharper increases during periods of rising crude oil prices.

Telangana, Andhra Pradesh, and Kerala continue to report some of the highest fuel prices among major states. Analysts say this is largely due to their higher VAT structures and additional state-level levies.

In Telangana, petrol prices have climbed above ₹115 per litre, making it one of the most expensive states for motorists. Andhra Pradesh also imposes additional levies and road cesses that increase the final retail price paid by consumers.

Maharashtra presents a different case. While its VAT percentage is lower than some southern states, Mumbai’s fuel prices remain high because of additional fixed taxes imposed on each litre of petrol and diesel sold in the city.

On the other end of the spectrum, Union Territories and northeastern states with lower VAT structures continue to offer relatively cheaper fuel. Port Blair in the Andaman and Nicobar Islands remains among the least expensive regions due to minimal local taxation.

The growing gap between states has once again revived debate over India’s fuel taxation system. Economists and transport industry representatives argue that the current structure creates uneven burdens on consumers depending on where they live.

India’s overall fuel tax burden remains among the highest in large developing economies. Taxes from the Centre and states together account for nearly half of the retail petrol price in many regions.

Supporters of the current structure argue that fuel taxes are an important source of revenue for both the Union and state governments. The money collected is often used for infrastructure projects, road development, welfare schemes, and fiscal management.

However, critics say the dependence on fuel taxes has made petrol and diesel excessively expensive for ordinary consumers, especially during global crises. Since transport costs affect the movement of goods across the country, higher fuel prices can also increase inflation in food, agriculture, and daily-use products.

Transport operators and logistics companies have already started warning about possible fare and freight increases if fuel prices continue to rise in the coming weeks.

In several cities, app-based taxi drivers and commercial vehicle operators said the repeated hikes were making daily operations difficult. Public transport agencies in some states are also reviewing operational costs as diesel prices continue to climb.

Economists say the broader concern is inflation. Rising fuel prices generally affect multiple sectors of the economy because transportation is linked to nearly every supply chain. Higher diesel prices, in particular, can increase agricultural costs and raise the price of essential goods.

The Reserve Bank of India is expected to closely monitor the situation, especially if global crude prices remain elevated over a longer period.

Internationally, India’s fuel taxation system differs from several major economies. European countries such as the United Kingdom and Germany also maintain high fuel taxes, but their systems rely more on fixed duties and environmental taxes. This creates greater price stability during periods of crude oil volatility.

The United States, by contrast, has relatively low fuel taxes, which makes pump prices more directly linked to crude oil fluctuations. China follows a more controlled system and has mechanisms that allow the government to adjust taxes and subsidies when global prices move beyond a certain range.

In India, discussions around bringing petrol and diesel under GST have resurfaced during previous fuel crises, but no consensus has emerged between the Centre and states. Many states remain concerned that shifting to GST could reduce their tax revenues.

Energy experts say India’s dependence on imported crude continues to expose the country to external shocks. Although the government has increased focus on renewable energy, ethanol blending, and electric mobility, petrol and diesel remain central to transportation and industry.

For consumers, the immediate concern remains affordability. With summer travel demand increasing and transportation expenses already high, households across urban and rural India are expected to feel the pressure of higher fuel costs over the coming weeks.

Market analysts say future price movements will depend largely on developments in West Asia, crude oil supply conditions, and the stability of global shipping routes. If tensions continue or crude prices rise further, additional revisions in domestic fuel prices cannot be ruled out.

For now, the latest increase has once again placed fuel pricing at the centre of public and political debate, highlighting the close connection between international conflicts, government taxation policies, and the everyday expenses faced by millions of Indian consumers.