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Market Chatter: India Raises Retail Fuel Prices Amid Middle East Supply Shock

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State-run oil marketing companies in India executed a secondary retail fuel price hike on Tuesday, raising petrol and diesel by up to 90 paise ($0.01) per litre, Reuters reported.

This follows a larger 3 rupee per litre price increase implemented last Friday, which ended a four-year retail price freeze dating back to April 2022.

A severe escalation in global crude oil benchmarks sparked by conflict in the Middle East has heavily penalized nation's energy import-dependent economy.

Despite the 3.90 Indian rupee per litre cumulative hike within a week, the Ministry of Petroleum and Natural Gas confirmed that Indian OMCs continue to operate under staggering financial strain, as per the report.

Crucially, the federal government has affirmed it has no structural plans to deploy fiscal subsidies or financial safety nets to insulate these state-backed refiners, the report added.

Market analysts note that the OMCs absorbed deep margin compressions over recent months to shield consumers prior to key state assembly elections, it said.

Following the conclusion of the polls, OMCs are now expected to implement a multi-phase, staggered pricing trajectory reminiscent of the post-COVID strategy of April 2022 to gradually recover downstream margins without triggering a massive macroeconomic inflationary shock.

The OMCs did not respond immediately to' requests for comment.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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