Fuel Prices Increase for the Third Time in 9 Days in India, Potential Impact in Nepal

In India, the price of petrol and diesel has once again increased, with petrol reaching 99.51 Indian Rupees per liter and diesel reaching 92.49 Indian Rupees per liter in Delhi. According to Indian media reports, this marks the third price hike in fuel within a span of 9 days, following previous increases in May where petrol and diesel prices rose by an average of 90 paise and 91 paise per liter, respectively. Nepal, which imports petroleum products from India, may also feel the impact of these price fluctuations. The Nepal Oil Corporation purchases fuel such as petrol and diesel from Indian Oil Corporation, making it susceptible to changes in fuel prices in India. A member of the Nepal Oil Corporation's executive committee highlighted that when fuel prices rise in India, it directly affects the corporation's costs. This could potentially lead to adjustments in fuel prices in the domestic market as well. The Nepal Oil Corporation executive committee mentioned that they monitor international market conditions and adjust fuel prices every 15 days based on a regulated system. The fluctuation in crude oil prices in the international market, particularly due to tensions between Iran and the United States, has been cited as the main reason behind the recent price hikes. The prolonged high prices of crude oil have put financial pressure on oil companies, leading to price adjustments. If crude oil prices remain high for an extended period, there is a possibility of further increases in petrol and diesel prices. In India, fuel prices had remained stable since March 2024, with the government providing relief to consumers by reducing prices by 2 rupees per liter before the 2024 general elections. Despite the availability of a system that allows for daily adjustments in fuel prices based on a 15-day average of international crude oil prices, political sensitivities had prevented significant price changes for a considerable period. The government-owned oil companies, including Indian Oil, Bharat Petroleum, and Hindustan Petroleum, were operating at a loss due to the increase in international crude oil prices. According to the Petroleum Ministry's Joint Secretary Sujata Sharma, these companies had incurred losses of nearly 30,000 crore Indian Rupees in the sale of petrol, diesel, and LPG. Previously, the government had compensated oil companies for selling petrol, diesel, and LPG at reduced prices, resulting in significant financial losses.