Mint Explainer | How long can India delay a fuel price hike?

after the US and Israel attacked Iran on 28 February. While several global economies, from the US to China, have already passed on higher costs to consumers, India has kept prices stable. With crude prices surging, oil marketing companies (OMCs) are taking a big hit.

How long can the government avoid an increase, and what are its implications? Mint explainsYes. What began as a supply disruption due to effective closure of the Strait of Hormuz by Iran is now fast becoming a case of supply destruction. As the West Asian crisis enters the third week, the US and Israel have begun attacking Iran’s oil and gas infrastructure—something they avoided till recently.Israel has struck Iran’s South Pars gas facility recently, while Iran has retaliated by attacking regional energy assets of neighbours, including bombing of Qatar’s Ras Laffan gas facility.

These developments have intensified supply concerns, pushing crude prices to around $110 per barrel levels.The government raised the prices of liquid petroleum gas (LPG) on 7 March after crude oil prices began to increase sharply. A ₹60 increase was announced for 14.2 kg cylinders used by domestic consumers, and a ₹115 increase was made for 19 kg cylinders used for commercial purposes.The government retained the PM Ujjwala Yojana subsidy at ₹300 per domestic cylinder for up to 12 refills per year. However, it refrained from increasing the petrol and diesel prices.

With elections announced in four states and a union territory, any increase will now be a political decision.Yes, widely. The US has seen an average increase in petrol prices of 20%. On 10 March, China announced a fuel price hike, the largest since March 2022.