When strikes on Iran effectively closed the Strait of Hormuz in late February this year, triggering the biggest disruption to global energy supply in half a century, governments around the world scrambled. Crude oil surged from around $70 a barrel to above $120. Fuel queues formed. Rationing began. Prices at the pump jumped 40, 50, even 80% in some countries.
In India, in Delhi rose from Rs 94.72 per litre to Rs 102.12 — an increase of 7.8%. went from Rs 87.62 to Rs 95.20, a rise of 8.7%.
The gap between those two sets of numbers is the story.
The scale of the crisis was severe by any measure. The carries roughly a fifth of the world’s traded oil, and its closure sent shockwaves through every import-dependent economy.
Pakistan saw the worst of it in South Asia. Petrol surged from Rs 253 per litre in February to Rs 414.78 by May, a rise of nearly 64%. At the peak, prices touched Rs 458.41 per litre, a rise of over 81%. The government called the hikes unavoidable.
Bangladesh raised petrol prices twice — first to 135 taka per litre from 116 taka in mid-April, then to 140 taka on June 1, a total increase of about 21%, which the government attributed directly to higher freight costs, soaring insurance bills and a tightening of global oil supplies.
In Britain, petrol rose from 131.6 pence per litre just before the war to a peak of 159.53 pence by late May, a rise of roughly 21%, adding about £12.68 to the cost of filling a typical family car.
Italy, Germany and France saw pump prices climb between 17 and 29%. In the UAE — despite being an oil-producing country — diesel rose by more than 85%, according to data from Statista tracking Global Petrol Prices.
A significant structural reason sits in a policy choice made well before this crisis began.
An economist familiar with the government’s thinking, who did not wish to be named, put it plainly: India had not passed on the full benefit of falling crude oil prices to consumers in the years before the war.
That meant when prices surged, the government already had a cushion built into the system. It did not need to raise prices as sharply as it otherwise would have because the base price had never been fully reduced in the first place.
But there was also a deliberate economic choice made during the crisis. The government simply chose not to burden citizens rapidly, even as oil marketing companies began absorbing massive losses.
Only when those losses became truly unsustainable, with OMCs together losing an estimated Rs 74,781 crore between April and June 2026 on petrol, diesel and LPG combined, did the government move, and even then it moved in measured steps.
India held petrol and diesel prices completely flat for 76 days after the crisis began, even as OMCs were reportedly absorbing losses of around Rs 1,000 crore per day. The pricing freeze broke on May 15, 2026, with the first upward revision in nearly four years.
Four hikes followed over the next ten days. The fourth, on May 25, was the largest in a single adjustment: petrol rose by Rs 2.61 per litre and diesel by Rs 2.71 per litre.
Across the four revisions, the cumulative increase was approximately Rs 7.50 per litre for both fuels. Excise duty was also cut by Rs 10 per litre in late March, costing the exchequer around Rs 1.7 lakh crore, to absorb some of the pressure.
The pattern was deliberate. Restrictions were imposed. Rations were managed. And as the crisis eased, they were unwound. Commercial and bulk LPG restrictions were lifted on June 25 as supply stabilised. As of July 1, OMCs cut commercial cylinder prices for the first time since the war began.
If petrol and diesel were managed through price suppression and excise cuts, LPG was the genuinely difficult challenge.
Over 60% of India’s cooking gas comes through the Gulf, and much of that supply went towards zero almost overnight after the Hormuz closure.
The cost of importing a cooking gas cylinder shot past Rs 1,600. A control order was issued within eight days of the crisis, directing refineries to divert propane, butane and related streams into cooking gas production. Several plants that had never made LPG were reconfigured. Daily output jumped from 35,000 to 54,000 tonnes within a week.
On price, the household cylinder was held at Rs 942. For the 10.58 crore Ujjwala connections, a Rs 300 transfer on annual refills brought the effective price down to Rs 642, even as the import-linked cost crossed Rs 1,600.
The gap between the actual cost and the retail price, roughly Rs 60,000 crore in under-recovery over the past year, was carried mainly by the state and by IOCL, BPCL and HPCL, with the Cabinet approving Rs 30,000 crore in compensation.
Beyond price management, the supply did not break, and that was far from guaranteed.
India is now the world’s fourth-largest refining nation, with capacity that has crossed 256 million tonnes a year. That capacity was built well before this crisis and gave the country the ability to absorb the shock and switch to processing crude from newer sources.
Over the past decade, India doubled its LPG import terminals, nearly tripled its LPG pipeline network and built a strategic oil reserve of 5.33 million tonnes. The number of countries India sources crude from expanded from 27 to 41, with Libya, Guyana and Equatorial Guinea among newer suppliers added, reducing dependence on any single route.
When Hormuz shut, Indian refiners began buying petroleum from Russia and other alternate sources. The government also raised export duties on diesel and aviation fuel to ensure domestic availability was not diverted abroad.
This did not come free. confirmed in a press conference that OMCs’ total under-recovery on petrol, diesel and LPG from the last quarter of FY26 and the first quarter of FY27 stood at Rs 2.1 lakh crore. For April to June 2026 alone, the confirmed loss figure was Rs 74,781 crore.
That is the real cost of India’s relatively low fuel price increases during the crisis. It was not absorbed by some natural advantage. It was absorbed by the balance sheets of public sector companies and, ultimately, by the exchequer.
The worst appears to be over. Under a US- understanding reached in mid-June, the Strait is reopening.
An Indian LNG carrier has already sailed out of the war zone. , close to pre-crisis levels. Commercial LPG restrictions have been lifted. OMCs cut prices on 19-kg cylinders on July 1 for the first time since the war began.
The broader economy held up through the crisis. Forex reserves hit an all-time high of over $728 billion the week the war began, growth stayed close to 7.6%, and inflation stayed within the RBI’s comfort zone.
The numbers across the countries tell the story clearly. When the same shock hit every economy simultaneously, the outcomes were very different. A 7.8% rise in Delhi petrol against 64% in Pakistan and 21% in Britain was not an accident. It was the result of deliberate preparation, deliberate suppression, and costs that were consciously carried by the state rather than passed on to citizens.
Whether that was the right trade-off, given the scale of losses absorbed by public sector oil companies, is a question that will take longer to answer.