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Discussions are reportedly underway between the finance and petroleum ministries and oil marketing companies over a possible fuel price hike amid the US-Iran deadlock.
PM Modi’s call for reduced fuel usage has raised concerns of a price hike. (Representational Image)
Prime Minister Narendra Modi’s appeal to citizens to reduce fuel usage and resume working from home comes amid concerns of a prolonged conflict between the US and Iran in West Asia, which could lead to a long-delayed fuel price hike in India, according to a report.
Amid the US-Iran deadlock, discussions are underway between the finance and petroleum ministries and oil marketing companies (OMCs). The timing and extent of a possible price hike will depend on global crude trends and the government’s approach to balancing inflation, fiscal pressures and energy pricing, reported Moneycontrol, citing sources.
Union Petroleum and Natural Gas Minister Hardeep Singh Puri said OMCs are buying crude, gas and LPG at higher cost, but are selling final products at lower cost to protect consumers, leading to mounting losses of up to Rs 1,000 crore.
“We have managed to protect the more than 60 million consumers who visit the retail stations everyday. Still further, Modi govt reduced excise duties on retail fuel and saw revenue losses of Rs 14,000 crore in a month,” he said.
PM Sh @narendramodi Ji appeals to the citizens to curtail use of petrol and diesel, use public transport where possible, and car pool as much as possible.Measures such these will help the nation conserve energy, save on the energy import bill and overcome the challenges arising… pic.twitter.com/D20ItaWFTo— Hardeep Singh Puri (@HardeepSPuri) May 10, 2026
He said the estimated OMC under-recoveries are expected to surge to Rs 2 lakh crore, and losses are expected to be around Rs 1 lakh crore.
Will Govt Raise Fuel Prices?
Sources told Moneycontrol that state-run fuel retailers may raise petrol and diesel prices in the coming days to offset mounting losses. “OMCs are incurring under-recoveries on sales of petrol, diesel and LPG and are in regular touch with the petroleum ministry and the finance ministry, where discussions on price hikes are taking place,” a senior government official said.
Sourav Mitra, Partner-Oil and Gas, Grant Thornton Bharat, said a fuel price hike has become inevitable if elevated prices persist. Government estimates show that India is spending around Rs 1,600-1,700 crore every day to absorb the impact of high global fuel prices.
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Prime Minister Modi on Sunday appealed to people to reduce fuel usage by using metro services, buses and other public transport wherever possible. He encouraged the use of electric vehicles, saying this would help reduce India’s dependence on imported fuel, and suggested resuming Covid-era practices like work from home.
US-Iran War
The US-Iran war has entered its third month with no end in sight, after the latest peace effort suffered a blow when US President Donald Trump termed Iran’s response to a proposed agreement to end hostilities as “totally unacceptable.”
India, the world’s third-largest importer, has been particularly affected by the war, as most of its LPG supplies come from the Gulf region. Since the war broke out, Iran has squeezed commercial shipping through the vital Strait of Hormuz, which carries 20% of the world’s energy supplies.
US-IRAN WAR LIVE UPDATES
Analysts say a prolonged conflict could raise the risk of inflation due to India’s high import dependence and reliance on the Strait of Hormuz. Mitra said India’s overall oil stock capacity is around 74 days, including 60 days of oil supply.
“In this backdrop, the Prime Minister’s call to reduce fuel consumption is aimed at moderating demand pressures, however, diesel consumption is structurally harder to cut given its critical role in goods transportation,” he said.
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