India's fuel price hike is 'smallest' among major economies
What's the story
India has been able to shield its consumers from the full impact of the global oil crisis caused by the closure of the Strait of Hormuz. The country absorbed rising crude costs for 76 days before implementing a phased increase of less than ₹5 per liter in petrol and diesel prices. This is said to be "the smallest material upward movement" among major economies outside the Gulf region, according to sources cited by CNBC-TV18.
OMC challenges
OMCs still reeling from losses
Despite the gradual price hike, oil marketing companies (OMCs) are still facing huge losses. After three price hikes, they are losing ₹38 per liter on diesel and ₹13 per liter on petrol. The cumulative increase across three OMC revisions on May 15, May 19, and May 23 was ₹4.74 per liter for petrol and ₹4.82 per liter for diesel, about a 5% increase on a base price of around ₹95 per liter.
Global comparison
Global fuel prices have skyrocketed
Unlike India, many economies have seen fuel price hikes of 20% to over 80% due to the Hormuz disruption. The EU-27 average petrol price has jumped to around ₹179 per liter, while prices in the UK, France and Germany are well above ₹190 per liter. After the latest revisions on May 23, India's average petrol prices range between ₹95 and ₹118 per liter depending on state taxes.
Government intervention
Government absorbing under-recoveries
At the height of the crude spike, the Indian government was said to be absorbing losses of around ₹24 per liter on petrol and ₹30 per liter on diesel. The May 15 and May 19 price revisions are likely to have lowered OMC losses by some 25%, although significant under-recoveries continue to be absorbed. The data shows Myanmar recorded the sharpest jump in diesel prices at a whopping 112.7%.