Fuel price hike explained: Why petrol and diesel are getting costlier in India

India sees unified fuel hike as Petrol, diesel and CNG cost more. Representational Image

Commuters across major Indian cities are facing a fresh increase in travel costs as prices of CNG, petrol and diesel have all moved upward in recent revisions. CNG prices in Delhi and Mumbai have been raised by Rs 2 per kg, while petrol and diesel prices have also seen significant increases of around Rs 3 per litre.

Together, these changes are expected to directly impact daily transport costs, from private vehicles to autos, taxis and buses.

Know the nationwide base change in fuel prices

The latest revisions include:

-CNG prices have increased by Rs 2 per kg, with rates in Delhi rising from Rs 77.09 to Rs 79.09 per kg, while in Mumbai they have gone up from around Rs 82 to Rs 84 per kg.
-Petrol: Increased by around Rs 3 per litre in major cities
-Diesel: Increased by around Rs 3 per litre in major cities

The hikes come after a long phase of 4 years of a relatively stable retail fuel pricing, making the sudden upward movement more visible to consumers.

The global trigger: West Asia tensions and oil market disruption

The main driver behind the price hike is none other than global energy market instability, triggered by geopolitical tensions in West Asia, including concerns around Iran and the Strait of Hormuz , one of the world's most critical oil and gas shipping routes.

Any disruption in this corridor affects global supply flows of crude oil and liquefied natural gas, pushing international prices higher. Since India imports a large share of its energy requirements, these global fluctuations quickly reflect in domestic fuel pricing.

Crude oil prices have already shown volatility, at one point rising sharply before stabilising around higher-than-usual levels, keeping pressure on fuel markets.

Why are Mumbai prices more than Delhi?

This disparity is mainly because of the folllowing reasons:

-Greater dependence on imported LNG
-Higher taxes and distribution costs
-Higher infrastructure and transportation expenses

Why the hike now, after such a long freeze?

Fuel prices in India were largely frozen for an extended period of 4 years straight despite global volatility. Oil marketing companies absorbed much of the cost variation during that time reports suggesting India's state-run OMC's burning through nearly Rs 1,700 crore every single day since approximately 10 weeks following the war.

However, sustained high crude oil prices and geopolitical uncertainty have made it difficult to continue absorbing losses, leading to gradual retail price revisions across petrol, diesel and CNG.

Not to ignore the fact that the increase also comes exactly 16 days after Assembly elections concluded in Assam, Kerala, Tamil Nadu and West Bengal.

Who will be impacted ?

Since a large share of urban transport depends on these fuels, the impact is immediate:

-Auto-rickshaws and taxis: Higher running costs, pressure for fare revision impacted majorly by CNG
-Buses: Increased operational expenses
-Private vehicles: Higher monthly fuel budgets
-Goods transport: Rising logistics and delivery costs

In Mumbai, transport unions have already begun demanding fare adjustments, especially for auto-rickshaws. Other than transport unions, multiple other sectors like agriculture is also expected to bear the brunt, along with an upward push in the overall inflation rate of the country.

Why all three fuels are moving together?

The simultaneous increase in petrol, diesel and CNG reflects a broader energy trend also creating a "combined inflation effect" on transport fuel, amplifying the burden on commuters.

However unlike CNG that follows global natural gas pricing, petrol and diesel are more directly tied to global crude oil prices. Both of these factors are influenced by the same geopolitical and supply chain disruptions

What is expected in future?

This price hike was inevitable owing to the geopolitacal tensions, though India's response has been relatively delayed as compared to nations worldwide. Oil Marketing Companies (OMCs) have already absorbed significant losses, and experts say the current revision may be only the first phase, with further changes possible depending on global developments.

They also note that fuel prices are now closely tied to global market stability, making volatility likely if tensions persist.

However for commuters, the result is a unified cost increase across the transport ecosystem from autos and buses to private vehicles with more adjustments possible if global conditions remain unstable.