Petrol, Diesel Price Hike in India is Likely if West Asia War Continues, Says RBI Governor Sanjay Malhotra
RBI Governor Sanjay Malhotra said India may eventually have to raise petrol and diesel prices if the Middle East crisis continues for a prolonged period. Speaking in Switzerland, Malhotra warned that higher crude oil prices and disruptions around the Strait of Hormuz are increasing pressure on inflation, imports and the rupee, even as the government continues absorbing fuel costs.
Reserve Bank of India Governor Sanjay Malhotra has indicated that India may eventually have to raise petrol and diesel prices if disruptions caused by the ongoing Middle East conflict continue for an extended period.
Speaking at a conference hosted by the Swiss National Bank and the International Monetary Fund in Switzerland on Tuesday, Malhotra said rising crude oil prices and supply disruptions are beginning to affect the Indian economy. “If this is to continue for longer period of time, it is just a matter of time before the government will pass on some of the price increases,” Malhotra said. Petrol, Diesel Prices Today: Will Fuel Rates Rise Soon? OMC Losses Cross INR 1 Lakh Crore As Crude Oil Surges Above USD 104.
Petrol, Diesel Price Hike in India is Likely: RBI Governor Sanjay Malhotra
The conflict in the Middle East and disruptions around the Strait of Hormuz have pushed global oil and gas prices higher, raising concerns over inflation, energy imports and supply-chain disruptions. India, the world’s third-largest oil consumer, imports most of its crude oil requirements and remains highly dependent on imported energy and fertilisers.
Malhotra said the current disruptions are already beginning to impact India, while noting that the government has so far maintained fiscal prudence and remained on the path of fiscal consolidation. The rupee has also come under pressure and is currently trading below the 95 mark against the US dollar. Air India Suspends Several International Flights for 3 Months Amid Rising Jet Fuel Prices Triggered by Middle East Crisis.
Government and Oil Companies Absorbing Costs
Despite the sharp increase in global crude prices since the Middle East conflict began on February 28, retail petrol and diesel prices in India have remained unchanged. At present, the government and state-run oil companies are absorbing much of the increase in fuel costs.
Excise duties on fuel have already been reduced, while oil marketing companies continue selling petrol and diesel below market-linked prices despite rising financial pressure.
However, prices of several fuel-related products have already increased, including:
- Commercial LPG cylinders
- Industrial diesel
- 5-kg LPG cylinders
- Jet fuel supplied to international airlines
Commercial LPG cylinder prices for 19-kg cylinders were recently raised by INR 993.
PM Modi and Oil Minister Flag Concerns
The developments come days after Prime Minister Narendra Modi urged citizens to voluntarily reduce petrol and diesel consumption and avoid unnecessary gold purchases to conserve foreign exchange reserves.
Union Oil Minister Hardeep Singh Puri also acknowledged concerns over the sustainability of current pricing measures.
“How long will the oil companies be able to take it? Frankly, that worries me,” Puri said at an industry conference.
Inflation and Growth Risks in Focus
The International Monetary Fund has supported the idea of passing on higher crude oil prices to consumers, while stating that India still has room to manage the current energy shock.
India’s retail inflation rose to 3.48% in April from 3.40% in March, although it remained lower than expected partly because the government absorbed some of the rise in crude oil prices.
Economists, however, warn that prolonged high oil prices could:
- Raise inflation further
- Slow economic growth
- Weaken the rupee
- Widen the current account deficit
The RBI has projected economic growth of 6.9% for the current financial year and average inflation of 4.6%. The central bank kept the repo rate unchanged at 5.25% in April, with Malhotra saying the RBI remains data-dependent and prepared to act if inflationary pressures become persistent.
(The above story first appeared on LatestLY on May 14, 2026 08:35 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).