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The hikes in petrol and diesel prices come after the government hold fuel prices for 76 days despite crude oil crossing $120 per barrel during the US-Iran war.
Petrol prices have increased by nearly 90 per cent in Myanmar, over 54 per cent in Pakistan, more than 44 per cent in the United States and around 19 per cent in the United Kingdom.
Even as the petrol and diesel prices in India have increased by around Rs 5 in three phases so far, the hikes come after the government held the fuel prices for 76 days despite crude oil crossing $120 per barrel amid disruption in the Strait of Hormuz during the US-Iran war. According to the latest data, despite the latest revisions, India still recorded one of the smallest increases in retail fuel prices among major economies.
Oil marketing companies (OMCs) raised petrol and diesel prices in three phases on May 15, May 19 and May 23. The cumulative increase stood at around Rs 4.74 per litre for petrol and Rs 4.82 per litre for diesel, the first upward revision in nearly four years.
Govt Reduced Excise Duty Before Hike
The increase came only after 76 days of absorbing the global crude shock triggered by tensions around the Strait of Hormuz, through a combination of excise cuts, under-recoveries borne by state-run fuel retailers and fiscal support measures.
India followed a very different fuel pricing strategy from many other countries during both the Russia-Ukraine conflict and the latest West Asia disruption. While many economies passed on higher crude costs almost immediately to consumers, India cut excise duties multiple times between 2021 and 2026 and delayed retail price revisions for extended periods.
| Date | Measure | Petrol | Diesel |
|---|---|---|---|
| 4 November 2021 | Central excise duty cut, before Russia-Ukraine war | −Rs 5 | −Rs 10 |
| 21 May 2022 | Central excise duty cut during Russia-Ukraine crisis | −Rs 8 | −Rs 6 |
| 14 March 2024 | OMC-led retail price cut | −Rs 2 | −Rs 2 |
| April 2025 | Central excise duty cut | −Rs 2 | −Rs 2 |
| 27 March 2026 | SAED cut on the eve of Hormuz disruption; full pass-through absorbed by exchequer | −Rs 10 | −Rs 10(diesel duty reduced to nil) |
| 15 May 2026 | OMC price revision, first in nearly four years | +Rs 3 | +Rs 3 |
| 19 May 2026 | Second OMC revision in four days | +Rs 0.87 | +Rs 0.91 |
| 23 May 2026 | Third OMC revision in 10 days; CNG +Rs 1/kg | +Rs 0.87 | +Rs 0.91 |
Source: PIB releases and OMC notifications. The cumulative increase across May 15, 19 and 23, 2026 stood at ₹4.74 per litre on petrol and ₹4.82 per litre on diesel.
Centre Slashed SAED On Petrol, Diesel
The biggest intervention came on March 27, 2026, when the Centre reduced the Special Additional Excise Duty (SAED) on petrol and diesel. Diesel excise duty was effectively reduced to zero, while the government absorbed the revenue impact instead of fully passing on rising crude costs to consumers. The March 2026 cut cost the exchequer around Rs 30,000 crore during the current fiscal year.
OMCs’ under-recoveries were estimated at Rs 24/Litre on petrol before price hikes
At the peak of the crude rally during the Hormuz disruption, under-recoveries were estimated at roughly Rs 24 per litre on petrol and Rs 30 per litre on diesel. Government figures cited in the note said OMC losses had touched nearly Rs 1,000 crore per day before the phased price revisions began reducing the burden. Even after the hikes, a portion of the losses continued to be absorbed.
Several Countries Have Hiked Petrol Prices By Nearly 90%
In the international comparison, between February 23 and May 23, fuel prices rose sharply across several economies. Petrol prices increased by nearly 90 per cent in Myanmar, over 54 per cent in Pakistan, more than 44 per cent in the United States and around 19 per cent in the United Kingdom. India’s increase during the same period stood at around 5 per cent.
International Petrol & Diesel Price Hike Comparison (February 23 – May 23, 2026)
| Country | Petrol | Diesel |
|---|---|---|
| Myanmar | +89.7% | +112.7% |
| Malaysia | +56.3% | +71.2% |
| Pakistan | +54.9% | +44.9% |
| United Arab Emirates | +52.4% | +86.1% |
| United States | +44.5% | +48.1% |
| Philippines | +40.6% | +53.8% |
| Sri Lanka | +38.2% | +41.8% |
| Nepal | +38.2% | +58.5% |
| South Africa | +33.1% | +63.6% |
| Canada | +31.9% | +32.8% |
| New Zealand | +30.7% | +88.6% |
| Thailand | +29.7% | +32.4% |
| Belgium | +25.3% | +30.9% |
| Vietnam | +23.8% | +50.6% |
| China | +21.7% | +23.7% |
| France | +20.9% | +31.0% |
| United Kingdom | +19.2% | +34.2% |
| South Korea | +19.0% | +26.2% |
| Australia | +18.5% | +43.1% |
| Bangladesh | +16.7% | +15.0% |
| Italy | +15.4% | +19.8% |
| Germany | +13.7% | +19.8% |
| Singapore | +12.7% | +64.7% |
| Japan | +9.7% | +11.2% |
| Saudi Arabia | 0.0% | 0.0% |
| India | +5.0% | +5.3% |
Source: GlobalPetrolPrices.com weekly retail data; country-level fuel price changes between February 23 and May 23, 2026.
Outside Gulf economies that directly subsidise fuel, India recorded one of the smallest increases globally despite being heavily dependent on imported crude oil.
Some opposition states levy a heavy VAT
While central excise duty is uniform across the country, retail fuel prices differ because states impose their own value-added tax (VAT), cesses and per-litre levies.
According to the latest data, Andhra Pradesh, Telangana and Kerala currently have some of the highest petrol prices in the country, crossing Rs 112 per litre, due to elevated state taxes. Telangana and Kerala are governed by parties of the INDIA bloc. These three states levy the highest VAT rates in the country: Andhra Pradesh charges thirty-one per cent VAT plus four rupees a litre plus a road development cess, taking the effective rate close to thirty-five per cent. Telangana takes petrol close to one hundred and sixteen rupees. Kerala adds a social security cess on top of its base VAT.
By contrast, BJP-ruled states such as Gujarat, Uttar Pradesh, Delhi, Haryana, Goa and Assam — all of which levy relatively lower VAT rates — remain among the cheapest markets for petrol.
UPA suppressed petrol prices via oil bonds
According to sources, the UPA government suppressed retail fuel prices through oil bonds that deferred the burden to future taxpayers. The UPA had issued about Rs 1.34 lakh crore in oil bonds to public sector oil marketing companies in lieu of price pass-through, between 2005 and 2010. The 2014 price was a deferred tax invoice on the next generation of consumers.
However, the BJP-led NDA has relied on excise duty cuts to keep prices from rising. While fuel prices have now started adjusting upward, India’s strategy during successive global energy crises relied more heavily on fiscal absorption and delayed pass-through than most major economies.
“The difference between the two mechanisms is not a matter of optics. It is the difference between paying for a price shock now and pretending to,” said the source.
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