Petrol and diesel prices in India were on May 15. Now, concerns are growing that fuel prices may come under even more pressure after the US allowed a key sanctions waiver on Russian oil purchases to expire.
The development comes at a time when global prices are already rising sharply because of the ongoing West Asia conflict and fears of supply disruptions around the , one of the world’s most important oil shipping routes.
On Saturday, the Trump administration allowed a sanctions waiver on Russian seaborne oil to lapse after a month-long extension. The waiver had earlier allowed countries including India to continue buying Russian crude cargoes without facing immediate sanctions-related risks.
The timing is critical for India because the country has increasingly relied on discounted Russian crude over the past two years to protect itself from rising global oil prices.
According to reports, India’s imports of Russian crude had climbed sharply in recent months. One report estimated imports at nearly 2.3 million barrels per day in May, while another placed imports at around 1.88 million barrels per day as of May 14.
That discounted Russian oil had acted as an important cushion for India at a time when global energy markets remained volatile.
But with the waiver ending, Indian refiners may now face stricter compliance checks, sanctions risks and financial hurdles while buying Russian crude.
At the same time, crude oil prices are again moving higher.
Oil prices extended gains on Monday after efforts to end the US-Israeli war on appeared to stall. Concerns increased after a nuclear power plant in the UAE reportedly came under attack, while reports suggested US President Donald Trump was expected to discuss military options on Iran.
Brent crude rose 1.81% to USD 111.24 per barrel, while WTI crude climbed 2.15% to USD 107.69 per barrel.
The surge in oil prices is important for India because the country imports nearly 85% of its crude oil requirements. This makes domestic fuel prices highly sensitive to global crude oil movements and geopolitical disruptions.
The ongoing tensions in West Asia, especially concerns around the Strait of Hormuz, have sharply increased fears of supply shortages. Any disruption in the region directly affects global oil transportation, shipping costs and insurance rates.
India had already raised petrol and diesel prices by Rs 3 per litre earlier this month as state-run oil marketing companies struggled to absorb rising crude oil costs.
if crude prices continue staying elevated.
“Revisions in fuel prices were somewhat expected as oil marketing companies are stretching their limits while absorbing high energy prices,” Gurmeet Singh Chawla, Managing Director at Master Portfolio Services Limited, told IndiaToday.in.
“With Brent crude already nearing $110 per barrel, further revision in petrol and diesel prices also remains plausible over the next three to four months if crude oil holds above the $90-100 per barrel range for an extended period,” he added.
The pressure on oil marketing companies remains significant despite the recent hike.
Dhaval Popat, Energy Analyst at Choice, said the current increase provides only partial relief to state-run fuel retailers.
“While the current hike of up to Rs 3/litre in petrol and diesel prices provides partial relief to the profitability pressures faced by state-run OMCs, the magnitude of current under-recoveries remains significantly elevated,” Popat told IndiaToday.in.
According to him, every Rs 1-per-litre increase in fuel prices can improve annualised EBITDA by roughly Rs 15,000–16,000 crore for the three PSU oil marketing companies combined.
“That means the latest hike could translate into an annualised earnings benefit of nearly Rs 45,000–48,000 crore across OMCs,” he said.
However, Popat warned that if global crude oil prices continue rising and the broader geopolitical situation does not improve, additional fuel price hikes may become difficult to avoid.
“In the current backdrop, provided there is no change in the global scenario and crude prices continue to build, a rise of around Rs 10/litre overall would be required to offset the losses,” he said.
The end of the Russian oil waiver has now added another layer of uncertainty to India’s fuel situation.
If Indian refiners are forced to reduce Russian crude purchases because of sanctions risks, they may have to turn towards alternative suppliers at a time when global oil supplies are already under strain due to the West Asia conflict.
That could further increase India’s oil import bill, pressure the rupee and raise inflation concerns.
Higher fuel prices do not just affect motorists. They also impact transport costs, airfares, food prices, logistics, household expenses and overall inflation across the economy.
For now, much will depend on how long crude oil prices remain above the USD 100-mark and whether tensions in West Asia ease in the coming weeks.