Petrol and diesel prices remained stable on Sunday, May 17 after the latest revision by the BJP center where fuel prices were hiked ₹3 per liter. On Friday, state-owned oil marketing companies (OMCs) increased the prices of petrol and diesel. representing a significant change in fuel rates over a 4-year period. The recent price change comes on the heels of a war in West Asia as the world struggles to meet demand for fuel amid supply disruptions through the Strait of Hormuz. Located in the Persian Gulf, this critical waterway controls one-fifth of global energy flows.
Until May 14, the government had cushioned domestic consumers from oil price swings as Brent crude prices soared to more than $100 a barrel in the past few months amid conflict in the West. The price of petrol in the national capital now stands ₹97.77 per liter against ₹94.77 per liter earlier, while diesel rates were hiked to ₹90.67 per liter from ₹87.67. Although fuel rates vary across states due to differences in value added tax, petrol and diesel prices are now at their highest since May 2022. The latest petrol and diesel prices for the city are given below:
Besides revising petrol and diesel rates, the Center has also hiked CNG prices in cities like Delhi and Mumbai by ₹2 per kg. In addition, export duty in the amount ₹3 per liter of petrol will be levied as per the latest Union Finance Ministry directive.
Brent crude jumped 3.35%.
Oil prices jumped more than 3% on Friday as Brent crude futures settled at $109.26 a barrel. A remarkable 3.35% gain of $3.54 a barrel was recorded on May 15 after comments from US President Donald Trump and Iran’s foreign minister further dented hopes for a deal. Over the past week, Brent jumped 7.84% and WTI jumped 10.48% on uncertainty over a shaky ceasefire in Iran’s war with the US and Israel.
“An increasing number of vessels are entering the strait … although this is currently having a more tangible impact on sentiment than on the actual oil balance,” PVM analyst Tamas Varga was quoted as saying by Reuters.
How will the extended closure of the Strait of Hormuz affect the markets?
Oil prices have risen more than 40% since the war in West Asia began on February 28, and the prolonged closure of the Strait of Hormuz has raised fears that inflation will rise globally, prompting a tightening of monetary policy by major central banks.
Phil Flynn, chief analyst at Price Futures Group, said: “The world has used up its oil safety net at a historic pace,” adding: “While strategic spills and reduced demand have prevented immediate chaos, the margin for error is shrinking rapidly. The prolonged closure of the Strait of Hormuz points to tighter physical markets, potential shortages of refined products and upward pressure on prices in the coming weeks and months.”
The Indian government also increased gold duty to 15% from 6% and urged citizens to buy less gold to preserve foreign reserves and the value of the rupee. International gold prices fell to a more than one-week low on Friday, pressured by higher energy prices that exacerbated fears of a sharp rise in inflation and longer-term higher interest rates.
