Two Prices on the Same Road

Private retailers sell a small share of India’s fuel, but their pricing is a useful early signal. Nayara, which is part-owned by Russia’s Rosneft, and Jio-bp, the Reliance and BP joint venture, buy crude and sell fuel on commercial terms. When international prices rise and stay high, they pass the cost on. Nayara said its 3 October increase reflected higher crude and product prices squeezing retail margins; it was its second revision this year, after a rise in March and a cut in July.

State-run companies have held back. The government has also asked private retailers not to restrict sales at their outlets, Sarkaritel reported, a sign that officials are watching for the queues and dry pumps that appeared during earlier periods of price gaps.

Private-pump prices vary by state because of local taxes. Goodreturns reported Jio-bp’s new prices at ₹109.80 for petrol and ₹97.75 for diesel in Haryana, and ₹108.54 and ₹99.19 in Punjab.

The May Hikes Most Drivers Have Already Absorbed

State-run prices have not been frozen all year. In May, oil companies raised prices four times in ten days, the first increases in nearly four years, Univest reported. Delhi petrol went from about ₹94.74 to ₹102.12, and diesel rose by about ₹7.53 to ₹95.20. Prices have been unchanged since 25 May.

The trigger was the war involving Iran, which began on 28 February and disrupted tanker traffic through the Strait of Hormuz. India’s crude import basket rose from $69 a barrel in February to an average of $113 to $114 in later months, and Brent peaked at $126 in late April, according to Univest. Brent has since eased to around $104, but that is still far above the level at which today’s pump prices make sense for the oil companies.

How your pump price is built

A litre of petrol at a state-run pump has four layers. The first is the base price, which reflects the international cost of crude and refining, freight and the oil company’s margin. On top sits central excise duty, a fixed amount per litre set by the Centre. Then comes the dealer’s commission. Finally, each state adds VAT, mostly charged as a percentage. Because VAT is a percentage of everything below it, any increase in the base price is magnified at the pump, which is why Hyderabad and Kolkata pay ₹11 to ₹14 a litre more than Delhi for the same fuel.

The rupee is the other quiet factor. Crude is bought in dollars, so a weaker rupee raises the base price even if oil is flat. Univest put the rupee at ₹96.26 per dollar in May; it has since firmed slightly, to about ₹95 in mid-October, which offers a little relief but nowhere near enough to close the gap.

What the Windfall Tax Is, and What It Is Not

“Windfall tax” sounds like a tax on drivers. It is not. In India, it refers to special duties the government imposes when global prices create unusually large profits for producers and refiners. India first introduced it in July 2022, removed it in December 2024, and reintroduced levies in 2026 after the Iran conflict drove crude prices up.

The current version works mainly as an export duty. When diesel, petrol or jet fuel fetch very high prices abroad, refiners have an incentive to export rather than sell at home. A per-litre export duty reduces that incentive and captures part of the gain for the exchequer. The Finance Ministry reviews the rates every fortnight to track international prices.

Why petrol went up and diesel came down

The direction of each change reflects export margins. Higher duty on petrol suggests international petrol margins widened, making exports more lucrative; the cut for diesel suggests diesel margins narrowed. The rates have moved repeatedly this year. ClearTax recorded a 1 July revision in which petrol rose from ₹1.5 to ₹4, diesel fell from ₹14 to ₹8.5 and jet fuel from ₹12.5 to ₹7.5 a litre. Telangana Today reported an August round in which diesel’s total duty rose to ₹25.5 and jet fuel’s to ₹22.

Source figures for each round come from different reports and do not always reconcile, so treat the table as a guide to direction rather than an exact series. What matters for drivers is the principle: these duties are levied on exports and do not appear on your pump bill.

The Losses Behind the Frozen Prices

Why are state-run pumps still at May prices when crude is above $100? Because the government and the oil companies have chosen, for now, to absorb the gap. Business Today, citing ICRA, reported that marketing margins in September were negative: about minus ₹8 a litre on petrol and minus ₹9 on diesel, with combined losses of roughly ₹530 crore a day.

Those losses cannot run indefinitely. If crude stays near current levels, the realistic options are a price increase at state-run pumps, a cut in central excise duty to absorb part of the gap, compensation to the oil companies from the budget, or a mix. Each choice shifts the cost: to drivers, to the exchequer, or to the companies’ shareholders, including the government itself.

What It Costs You Today

For most drivers, the relevant number is still the May increase. Someone using 40 litres of petrol a month in Delhi is paying about ₹295 more a month than before 15 May. If you buy from a private pump, add another ₹200 a month at the new ₹5 premium. A diesel user taking 60 litres a month pays about ₹452 more since May, and about ₹180 more on top at a private pump.

Where the knock-on effects show up

Diesel matters more to the wider economy than petrol, because it moves trucks, buses and farm equipment. Any future diesel increase at state-run pumps would feed into transport costs and food prices. That is one reason the Reserve Bank of India cited fuel costs when it raised the repo rate to 5.50% on 7 October. Business Today quoted analysts warning that high Brent prices complicate India’s inflation outlook.

CNG users have not been spared either. Delhi’s CNG price rose by ₹1 to ₹81.09 a kilogram on 23 May, Univest reported, in the same week as the petrol and diesel increases. For commercial fleets and auto-rickshaws that run on gas, that was a smaller rise than petrol and diesel saw in the same week.

The Fuel Timeline of 2026

• 28 FebruaryUS-Iran conflict begins; Hormuz shipping disrupted
• MarchWindfall-style export duties reintroduced; Nayara raises prices
• Late AprilBrent peaks at $126 a barrel
• 15 to 25 MayFour PSU hikes; Delhi petrol to ₹102.12, diesel to ₹95.20
• 1 JulyExport duty revision: petrol ₹4, diesel ₹8.5, jet fuel ₹7.5
• SeptemberPSU margins at minus ₹8 to ₹9 a litre, ICRA
• 3 OctoberNayara: petrol +₹5, diesel +₹3
• 11 OctoberJio-bp: petrol +₹5, diesel +₹3
• 16 OctoberPetrol export duty ₹2.5; diesel ₹8.5

How to Spend Less on Fuel Right Now

You cannot change crude prices, but you can control where and how you buy.

• Compare the board price at PSU and private pumps, up to ₹5 a litre apart
• Keep tyres at the recommended pressure printed on the door frame
• Check fuel-card and credit-card cashback and surcharge waivers
• Track state VAT; neighbouring states can differ by ₹5 or more
• Plan longer trips around PSU outlets on highways
• Combine short trips; cold starts burn more fuel
• For fleets, review diesel surcharges in contracts now
• Watch the next fortnightly duty review, in early November